Given today's real estate market

[t206blogcom]

I won't step into the 'whether a house is an investment' argument, but I don't think it's a bad idea to sell some or all to help fund a home purchase. I'm considering doing the same thing within the next year.

While I love collecting as much as the next guy, in the end, it's just cardboard. A home is an investment in your family and your life. I'd take a home over a stack of cardboard any day, unless the stack came from the Black Swamp...

[barrysloate]

There are too many variables to answer that question. One would need to take a full inventory to make that decision: do you need a house, where do you live, what other assets do you have, how old are you, etc. A house is a big commitment so I would take as many factors into account as possible.

It might be a great idea for some, not so for others.

[Leon]

Two different things. Cards are liquid and houses not so much. I think it really comes down to what your family goals/needs are. You can't live in your cards.. If it means a better life for you and your family by having the house then I say do it. I would sort of make the decision based on the house need and just think of the cards as cash you have now.

[phikappapsi]

Well, in the discussion with my buddy, we basically came up with the summation of most of the points made in the thread, though still maybe logically flawed. He currently rents, and collects modern (which I see lesser "investment" potential in) so we concluded, for him, liquidating would be the right choice, because he'd merely be swapping asset classes. For me, I already own a house, so if I bought another, the current one would turn into a rental. I also collect mainly in pre-60s, so I see better longterm value in the collection. So in his case we ended at a clear sale, for myself, a little more convoluted.

[Vegas-guy]

Well as someone that has done this I'm not sure??? I sold my entire collection about 10 years ago and used it as a down payment on two homes, one as an "investment" rental property and one as our main house. Now we all know what happened in 2008 and I lost my A$$ on both and ended up short selling both to get out from them (I'm not talking like 50k loss, on our main home we lost over 250k..) Now having said that there was no way of knowing it was going to happen or if it will happen again but after what happened to me I wish I had my cards back..

As someone above posted the cards are liquid and much easier to sell then a home. Now if you can sell all your cards and pay cash for the house that's a different story.

[Leon]

Well, since we are here.

My wife and I have spoken about our goals too, with respect to my collection, many times. I could probably pay off our sizable mortgage (see farm house on acreage ) if I sold my cards. My wife just knows the cards can bring cash and fast . She has said she doesn't want me to sell them to pay off the house because then we won't have liquidity. So, I happily keep collecting (uh, er...spending) .....Good luck whichever way you go.

[SMPEP]

Guess I'm the contrarian, but I don't see this as a good opportunity to buy a home at all. In fact, I would argue it's the worst time. Rates are low. Probably too low. At some point they will rise. Now we've seen in Japan this ebvironment can continue for 20 years ... but banking on that doesn't seem wise. Even predicting 5 years out is near impossible for the professionals.

So with rates this low, you know that when it comes to sell the home ... rates will be higher ... and therefore your house will be worth less money. Most likely a lot less.

If you never plan to sell, okay buy. If you plan to rent it out, Ok. Someone else is paying your mortgage (assuming you are doing this right). So who cares what the house is worth when you sell it. You essentially got an asset for free.

But the premise of the original question was an investing decision, whcih suggests you will sell at some point and aren't renting it ... and as rates rise, you will lose.

[phikappapsi]

Again, I made this point earlier...on the face of it, your analysis makes sense... But history and further data suggests that when rates rise, it's usually with inflationary pressure...thusly devaluing the dollar, ie prices, including home prices rise... Also, as rates spike, the cost of the money you borrowed becomes lesser. Borrowing at 3.5% and holding while rates rise to 9% means you're paying yourself a de facto dividend of 5.5%.

[glchen]

I think you should consider cards as an investment vehicle. (also as the caveat, don't count on your cards for your financial safety.) You can't sleep in your cards. They don't shelter you from storms, the cold, etc. If you need a house, I'd buy a house. However, if you already have a house, and are looking for one for rental, then you'd just have to decide which is the better investment.

[phikappapsi]

That's awful man, truly. But seeing as now we're on the clear backside of that bubble, can much more really happen to housing? Not to go in a political direction (obviously this isn't a politics forum) but does anyone see any way for inflation not to kick in over the next 3-5 years? Interest rates have to go up at some point, seems to me that a mortgage now, at 3.5% is almost going to look like free money in 5-10 years.

[barrysloate]

Joe- if you buy a second house for rental, and the rent income pays for the mortgage, taxes, and upkeep, it's hard to imagine it won't work out. But always built into that formula was the idea that the property would increase in value. I don't think you can count on that any more. So factor everything in and see if it still makes sense for you.

[bbcard1]

There seems to be a built in assumption that baseball cards are more liquid than real estate...that is a flawed perspective because of the sickness we share here on this board. Both are only liquid at a price. Maybe real estate is down, but most baseball cards are as well to a great degree except for the thin level at the top.

[martingale]

Don't do it, for two reasons:

1) Real estate is not an investment, it is a place to live. (Unless of course you are very wealthy, don't have to borrow to incur in debt, and can afford to have an illiquid asset as a small percentage of your total net worth).

2) When interest rates go back up, the cost of money is going to be higher and it is very possible real estate prices will go down because buyers will not be able to afford as much real estate as today.

[phikappapsi]

Logical flaw... As interest rates go up, inflation does too... So even if rates would pressure home values down, inflation pushes home values up. So if you can leverage debt in today's dollars at 3.5% and rates go back to the 7-9% range which is a historic average, youre basically earning. 5+% untaxable dividend, even before the home itself rises in value.

I know it sounds like I'm talking myself into liquidating my collection...not the case, just playing devils advocate to the previous post.