I’ve been dating this horse trainer at a reputable farm for a few months now, and she has brought up the idea of investing my money into horses. Now, I’ve got about a hundred grand saved up, with which I originally intended to travel with (going from hilton to hilton and eating unicorn steaks along the way).
But as a woman it is in her blood to crush my dreams and recently she’s been trying to convince me to make a bid on a pregnant broodmare (co-ownership) for $25,000. As someone who lives and works on a dressage farm she would take care of all the other aspects, including insurance, medical, farrier, lodging, sperm, transport etc.
The mare has an impressive bloodline, for dressage and jumping. It’s got Furioso uno and dos, and a few other big names that are apparently popular enough to warrant their own wikipedia pages. When I spoke to the current owner, she told me that when the foal hits the ground it’ll be worth 15k, and if it’s black I could recoup all my expenses as soon as it’s born.
My knowledge of horsemanship includes watching a My Little Pony episode and knowing how to pronounce cavalry and I’m not too sure about the latter. There’s not a whole lot of dressage horse purchasing information out there. Anyone with any experience in the field? I’d hate to spend my reiny day fund and be saddled with some lame ass-et and a huge bill-et when I could bale now and just have to listen to her whinnying for a few days.
I know someone who invests in race horses. He does ok, but is brilliant - and has a close relative that does horses for a living. He also can afford it if something bad happens.
What happens if you and this woman split up?
How will the business be structured?
What do you mean you will recoup all your expenses if the horse is black? Do you mean the full $25,000? What about her share? This means you have to sell it for $50,000. And then what about taxes? You’ll have an LLC right? Will this be a short term capital gain? What rate in taxes will you pay?
How is she going to pay for vet bills? What happens if she falls on hard times?
Things go for about what they are worth. This is a basic economic fact. It isn’t always true, but you need to know what you are doing (or get lucky) otherwise.
Standing joke in the horse world is that to make a small fortune in horses, you need to start with a large one.
Actually, that’s not a joke, it’s pretty true.
You might get your money back, or the mare might colic and die. Or the baby be born with a fairly common leg deformity that’s correctable with $$$ surgery. Breeding is prone to fads too, just like everything else, those lines may suddenly be not all that and a bag o’ chips in two year’s time, and a mare’s gestation is 11 months.
Horses are lovely, wonderful creatures and if you have the money to invest for the fun of owning a share of a horse, then go for it. But don’t go into it expecting to make anything, because the odds are that you won’t.
By recouping all the expenses, I meant that the first born will be completely mine to do with what I wish, from then on we’d split ownership of the foals. The broodmare in question is 8 years old, imported from Germany and did pretty well in the MPT GOV (7.5 avg), her dam is also a St Pr, and has all sorts of associated titles.
The girlfriend would be insuring the horse for its cost, with me being the only benefactor. Her boss is a USDF champion, and her farm is exceptional, so I’m not too concerned about health concerns being overlooked. I’m sure it’ll get the best care available (which will be the girlfriend’s expense).
I’m not sure about the tax issues. I’ll have to talk it over with an attorney. Really, I just want to enable her to get her dream mare and recoup my expenses. I’m not trying to make a fortune, but I don’t want to lose $25,000 with nothing to show for it.
Are you in one of those financial situations one hears about where, for tax purposes, you need to lose some sum of money in a failed business venture? If, as you say, all you know about horses is 1) what you’ve learned from watching My Little Pony and B) how to pronounce “cavalry” then I don’t think you know even what questions you should ask. And any questions I could come up with I wouldn’t ask someone who stands to directly benefit from me giving them a boatload of cash.
Is the girlfriend so good in bed that she’s worth $25G?
If it is selling for $25,000 - your chances of making that back in a year or two are small - or it would be going for more. I don’t know that much about dressage - basically nothing except Mitt Romneys wife was into it. But based on what I know about horse racing - pedigree is no sure thing - far from it. I’m guessing lots of people in that field have money - people that have large farms and staff - one extra horse isn’t much to them - they could easily take it - but they aren’t.
You say you’ve only been dating a few months. I’m not sure how old you are, but $25,000 isn’t chump change. To me it would raise huge red flags if someone I’d been dating was putting pressure on me to help her get her “dream mare”.
Also - I’ve known quite a few talented people - she may be a great rider or trainer or whatever they have in dressage - that doesn’t mean she has a mind for business.
I would definitely talk to an accountant and an attorney.
I doubt you’ll find any that think this is even remotely a good idea.
What if her dream mare isn’t such a dream? Then will she need only another $25k?
The market for horse went right through the basement due to the recession and the many fewer people who can afford them. I’ve owned two relatively cheap horse for my daughter to do hunter jumper on. The first, which was really cheap and which she trained, we managed to sell for more than we paid for it. The second one we donated to charity for the tax break, and you can’t even do that any more.
I’ll agree with everyone else that you should only invest if you don’t mind losing $25K. (is she going to pay for stabling, vet bills, etc.) That’s significant - when our daughter went to college and we stopped paying for the horse and started paying for her, the bills didn’t go up significantly. We were at a good barn but not a super high end one.
It is very easy to lose money. Joe Montana is well known in our area for making terrible horse purchasing decisions. He can afford it, can you?
Is there any money to be made in dresage at all? I understand people from outside the horse world come in and make bets on thoroughbred and some other kinds of racing, and part of that goes to prize money, and I know people who have invested in these kind of horses, but where does the outside money come in for an excellent dressage horse? Isn’t it kind of a zero sum game?
Apparently there is prize money at some levels, but I don’t know where it comes from.
I was assuming it was just other rich people paying for status horses, but I do not know. I’ve done a fair amount of work/research (most quite some time ago) on thoroughbred betting - and never even heard of dressage til Mitt Romney. AFAIK - there is no real betting market on it in the US.
Nothing I’ve heard of, though I don’t claim to be an expert. Probably just distributing entry fees around among the winners (with a take for the house), like those “Toddlers and Tiaras” beauty pageant contestants.
I have observed and had to advise horsey people over 25 years, both in racing and dressage. When I say advise, I’m talking disputes. Horses are lovely animals but they bring out the worst in people. There is a lot of emotion involved.
Ask yourself this - how hard was it to save up $25,000? How long will it take you to save another $25,000? Because you are waving goodbye to that sum right now.
When you say the 1st foal will be completely yours, that means that you are responsible for its care and handling, right? That stuff costs $$, and since you yourself can’t do any of it, it’s going to cost more. You can easily burn through 25k in the time it may take to get the foal sold. And horses are delicate, even at the top farms shit happens and horses die or are injured severely enough to affect the sale price.
They are also very much individuals - you can breed the best to the best and still get ‘meh’ as far as ability goes. Or they may have all the talent in the world but also have a serious screw loose - not at all an uncommon thing. Very talented horses tend to be very hot and quirky, what children’s books and Disney call “fiery” and “spirited”. That takes a very special kind of handler and rider, and is therefore a much more difficult sell.
As far as the boss goes, USDF champions are a dime a dozen and it doesn’t mean much. IF these people are top breeders with many years of successful buying, breeding, training and selling, then maybe you stand a chance of not losing your shirt. Otherwise you might as well consider that 25k a gift, because the chances that you’ll get it back, never mind make anything on top of it, is slim.
When you say her dam is a St Pr, are you saying that the dam was successful at Prix St. Georges? Because that is a high level of dressage ability, but it’s by no means unique.
Put it this way, would you go to Vegas with 25k and play Craps with it? Because if that level of risk is too much for you, don’t invest in a horse to make money.
If your lady is seriously recommending that you sink 25k into a breeding, I seriously question her ethics.
Anything can happen. A beautifully bred foal can take a bad step and end up permanently lame. An $800 racetrack reject can win an Olympic medal. There are no guaranteed payoffs, ever.
Horses are a fun hobby when you have money to burn - sure. An INVESTMENT!? Are you high?
Seems to me the answer is somewhere in between. You want this woman to get her dream but you don’t want to lose $25K.
Why don’t you just loan the woman $25K, secured by the horse? That way, the woman gets the horse (which is what she really wants), she makes regular payments to you (reducing your risk) and if she defaults you end up with a horse to sell (which is where you’d be in the first place.)
If this horse is really the great investment she claims it would be, it seems she’d be thrilled to have it for $25K on decent terms. Besides, the foal is worth $15K, so she’d immediately have that cash to start paying you back. If she isn’t willing to accept the risk, perhaps you shouldn’t either.
My Fella has a daughter that loves horses, she’s started her own business. Teaching riding, boarding–and she’s good. She rides too, dressage.
She still asks for money all the time. (Her husband works, he funnels everything in he can) She wanted several thousand dollars recently and he(The Fella) said “No.” And when talking about it he told me “I am not the Daddy ATM!” Either her business works or it doesn’t. She’s in her late thirties, he’s not turning a kid out or anything.
