Investing In Young Stock

[Lord_Helpus]

I have ridden all my life, but my back has gotten too bad to seriously ride/compete. However I want to stay in horses, so I am thinking of buying promising young horses and “flipping” them 1 - 2 years later. I am talking about high end hunter and jumper bred horses.

I have a good eye for a young horse and can envision how they will mature. My last 2 young horse purchases have turned out to be wonderful horses; everything I could have hoped for. However, I bought them for me to ride, and now I will be buying them for resale.

What is the age range which will (in general) give me the biggest net gain? I know that the biggest gross price increase is between 1 - 4 or 2 - 4 years old. But, one has to break, train and show the young one to maximize appreciation. Since I cannot do that myself anymore, paying for others to do it will substantially eat into any profit.

In general, how much does a young horse appreciate between weanling --> 2 year old? V. between yearling --> 2 year old? V. yearling and early 3 year old? V. between any of the above ages and a 3 year old with 90 days put on it? (I know that this will have the biggest difference in price, but the cost of keeping and backing the horse might not make this the best investment decision.

Thanks for any advice. I need horses in my life and this seems to be a good way to do it.

[Laurierace]

I really think the term investing in horses is an oxymoron for 99% of people. Very few are set up to raise, train, show and market a horse for a profit. You really need to be proficient in every single one of those areas plus have your own farm so you don’t have to board. If you have to pay someone to do even one of those things you stand little chance of turning a profit. Rethink your plan with the idea that breaking even would be great but it would still be worth it to you to have a horse in your life even if it meant “losing” several thousand and see if it still holds the same appeal.

[Lord_Helpus]

PS: I have been trying to calculate the costof keeping a horse for a year (something I should have done decades ago, but have avoided). I am coming up with the following rough numbers. Please comment if I am way off base:

I have my own farm, so I do not have to pay for boarding.

Feed: 1/bag month ($20/bag) x 12 = $240/year
Hay (top quality orchard grass with 25% alfalfa) $1000/year
Vet (shots, teeth floating/extractions, and the inevitable vet calls for misc.) $1000/year
Farrier: trims every 4 weeks: $750
Pro rated share of pasture maintenance (seeding/fertilizing/fencing/ run in shed and general upkeep) $1000
Bedding and misc costs when inside: $500

This comes out to approx. $4500/year just to keep a horse on the farm. I am not including labor for handling the horse because I do that. However, labor is figured into vet and farrier and pasture maintenance.

So, it seems that, if I buy a young horse and keep it for 2 years, he/she will have to appreciate about $10,000 for me to make a profit.

Can this be done?

[Laurierace]

You are going to keep one horse alone on your property? The bottom line is, yes it is possible to make a profit. It is also possible to lose tens of thousands! They don’t appreciate much with age like a race horse foal would, they appreciate with training and show experience which of course costs money. A lot of money if you have to pay someone to do it for you.

[Lord_Helpus]

Never alone. Right now I have 5 horses, with the plan to sell one within the next year. 2 horses in one 5+ acre field, and 3 in the other.

Can’t have an odd number, now, can we? 3 and 3 would be perfect. :lol: So, the plan would be to buy one young horse now and then a second when the “to be for sale” horse sells.

[Laurierace]

Assuming you can weather a possible loss, go for it!

[Molly_Malone]

I would imagine that OTTBs who look like warmbloods would give you the best return. Otherwise, the jump in price from 2 1/2 and unbroke and scraggy to 3 1/2 and under saddle and shiny is probably the biggest.

[RedMare01]

I would say buying yearlings in their fugly stage between 1-2 and selling at 3.5-4/after they’ve been started and lightly shown would be the most profitable. If anything in horses can be seen as possibly profitable…:lol:

Seriously though, the prices between weanlings and yearlings is rarely very different; you could likely get a horse at 1-2 for roughly the same price as a baby, and you have 1-2 less years to carry it until it grows up.

[Lord_Helpus]

Another issue to factor in: Are many/most of the best prospects sold in their year of birth (i.e. foals of 2013 now). Or will I still have a lot of top quality choices if I am looking for foals of 2012 or 2011?

Laurie, I appreciate your “go for it” advice, and there is a lot to be said for the fun I will have in doing this in the first place. And, you are right — I will probably do it anyway. My real question is how to take the least amount of risk, to net as close to a profit as I can. ---- Because, any horse I buy will, of course, mature beautifully and have no setbacks along the way. :lol: :lol: :lol: :lol:

RedMare, thank you for your input; that is the kind of information I am looking for.

Molly, I will not automatically discount a TB, (3 of my 5 horses are OTTB’s) but there is a prejudice against them now, and I am looking for a resale project. So I need to start with a horse with great Jumper breeding to get prospecive buyers to even contact me about a sale horse.

[Perfect_Pony]

[QUOTE=Molly Malone;7234531]
Otherwise, the jump in price from 2 1/2 and unbroke and scraggy to 3 1/2 and under saddle and shiny is probably the biggest.[/QUOTE]

Yes this! I cannot tell you how many horses I have seen relatively cheap as 2 year olds. 30 days undersaddle the summer of their 3 yo year I see them gorgeous and more than twice the price!

I think the key would be finding a 2 year old in the fall a breeder doesn’t want to keep over the winter? Throw them in the pasture and get them started the next year? I would not think it a guarantee to make money but I would think it would give you the best shot.

[Laurierace]

Why don’t you really come to the darkside and buy a nice, in foal mare?!

[Foxtrot_s]

Not sure that ‘investing’ and ‘young stock’ go together. I’d think investing in a Columbian gold mine would bring better rewards – we have part of one!!! Kidnappings, guerilla warfare, FARC…etc.

[Home_Again_Farm]

From what I have experienced and seen, the people who do well with investing in youngsters have excellent eyes for real potential, have a large network of contacts from which they may find diamonds in the rough, have their own farms and often grow their own hay and do all the work, and also do all own training, showing and marketing. If you don’t tick all those boxes, investing in youngsters can be as lucrative as throwing valuable coins into a deep well. :winkgrin: :sadsmile:

[Lord_Helpus]

[QUOTE=Laurierace;7234804]
Why don’t you really come to the darkside and buy a nice, in foal mare?![/QUOTE]

I have seriously considered that, but I do not have the heart to be a breeder. And I do not get along with mares (God Damn effing hussies! )

By buying I can pick the sex, and pick the conformation and potential — PLUS I do not have the emotion invested in it, that I would with a homebred. Selling a homebred would be like selling one of my doggies – Ain’t gonna happen.

And, Foxtrot, Can you stay up all night with a colicking goldmine? Hose its swollen leg down 2x/day? Get stepped on and body slammed when clipping it for the first time? Noooooooooo. All you can do it look at it, and dodge bullets :lol:

[horseryder31]

It seems to me that the best way to make a profit is to keep them for less time. Is this always possible? Nope. Doable? …sometimes. The longer the time the more costs associated. I have not tried it, however, it seems for this type of business model buying the scraggly 3 year olds as REd Mare said and putting the 30-60 days on them and flipping them. Pretty much putting them on the market when you get them and selling them. In a perfect world with sunshine and rainbows it works, but more likely the profits will be fairly razor thin unless you get some talented well bred horses and high rollers.

[TKR]

I have no doubt that you have the “eye” for it. Actually, if you do some searching, you can probably find a nice 2 y.o. that someone needs to sell this time of year. It’s surprising (HA!) how South things can go in the horseworld. Just beat the bushes a bit and don’t be in a hurry and see if something pops up that would “make up” like you want it. A long 2 y.o. that can be started in the spring could be a profit maker if they don’t kill themselves over the winter (we all know how silly a baby can be and there’s not enough bubble wrap to protect them). It won’t cost you to look! Good luck!
PennyG

[ahf]

I’m of the opinion that nice, athletic 2yo’s for the hunters are not that easy to find anymore. Many breeders, a lot of them with very nice producers, have left them open for the last few years, and it’s beginning to really make itself felt in the marketplace. At least on the east coast.

[ThistleDewDressage]

Good Luck…I think that everyone has said what I would.

[Pennywell_Bay]

Don’t forget to figure in insuring the prospect. I learned the hard way. It can be heartbreaking enough. That being said, I love the young uns and it is satisfying when they move on to successful careers. (Oh - just make sure you can part with them, ask me how I know).

[Fred]

[QUOTE=TKR;7234938]
I have no doubt that you have the “eye” for it. Actually, if you do some searching, you can probably find a nice 2 y.o. that someone needs to sell this time of year. It’s surprising (HA!) how South things can go in the horseworld. Just beat the bushes a bit and don’t be in a hurry and see if something pops up that would “make up” like you want it. A long 2 y.o. that can be started in the spring could be a profit maker if they don’t kill themselves over the winter (we all know how silly a baby can be and there’s not enough bubble wrap to protect them). It won’t cost you to look! Good luck!
PennyG[/QUOTE]

I agree with Penny, LH. You have the experience, the contacts, - trainers, riders and breeders - the farm and the wherewithall, plus it is something you would enjoy, a project.
As Penny said, often breeders will have a lovely 2 yr old, and other youngsters coming up behind and more mares due, with space and funds starting to crunch. The price difference between that beautiful weanling and that 2yr old may not be that much.

I think many a breeder would want to put a good youngster in good hands like yours.

Good luck, have fun looking.