NFA loans?

I do have daughter, so paying for college is an issue. My wife has no real retirement savings, so I have that to worry about too. And of course the last few years have wiped out most of my equity in the house.

That said, I don't carry debt anywhere else and have great credit. I regret not getting a MAC just a few years ago when they were nearly half the cost. I don't want to look back again 5 or 10 years from now and think "if only...". I feel like I'm nearing the now or never moment to play in the full-auto game. Conveniently, I'm closing in on 50. Call it a mid-life crisis colored in gunmetal gray instead of candy apple red!

IMBLITZVT said:

I would never borrow just to invest without a clear quick profit.

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Alphabrew said:

Wow, hell if I'd borrow money to purchase a ...

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You're both missing out. (not just NFA items.) If you can borrow money for less than you can invest it for, you can make money (and you can loose money.) It doesn't need to be quick turn either. I took a mortgage against my house to invest. Margin accounts are another. Borrowing money against assets you have to invest more. If you can't afford to loose the money, don't do it - that goes true for just about anything. But if you don't mind some risk (buying houses, silver, guns, etc all involves SOME risk so no one is completely risk adverse) the upside can be good. Being debt adverse will hold you back financially. Debt is fine, even good. You use a credit card right? Debts you cant cover - THATS whats bad. It takes money to make money. Even Warren Buffet borrows cheap money to invest. Leverage what you have to make more (within reason.)

rem87062597 said:

It's only an investment if you plan to actually sell it though, otherwise it's just an asset.

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One doesn't exclude the other. Real estate is both an investment and an asset. Precious metals are both. If affects your net worth its an asset. Most people die before they sell all their assets. The smart ones invest in enough of them so they can enjoy retirement w/ only selling a few.

Alphabrew said:

I think we're in a huge MG bubble.
...
Prices are in the stupid territory for MGs IMHO.
...
if a dude like me thinks MGs are too expensive, they are def going to come down in the future. Bank on it.

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You've harped on this over and over (and over and over in other threads.) I think you're 100% wrong (long term.) That you don't really understand investing show (to me) that you really don't understand the financial markets. See below:

rem87062597 said:

Simple supply and demand isn't a bubble.

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^this. x1000. There are a ***LOT*** more gun owners now getting into NFA items. Suppressor sales have off the chart growth. Way more people wanting to buy machine guns is what is driving the price. Simple as that. Unless America looses its love affair w/ firearms that isn't going to stop. Its whats driven the market since 1984. Now it IS affected by the economy. People dumped exotic cars in the last downturn because they either couldn't afford them or needed the money. MGs fall in the same category. They have cyclic ups and downs too. So they may take a hit in a downturn but they will recover as long as the economy does too. The high end is FAR from where it is now.

Alphabrew said:

If anything, it's the rich baby boomers who are paying stupid money for MGs now.

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How many MG shoots have you been to? Come on out and tell me how many rich baby boomers you see... (no doubt they exist but they aren't the majority.) Someone else will always have more money than you (or me or Warren Buffet.) As long as those people want to buy guns, either to shoot or sit in a safe, they will command more and more money.

ericoak said:

No offense, but it sounds like you have no idea what you are talking about it. The fact that you personally wouldn't pay for something has no bearing on what the market is.

....

I personally know 4 people who said they wouldn't never buy a MG, but not a year after getting their first tax stamp were looking to purchase Macs.

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So the fact that I wouldn't buy an MG at these prices has no bearing on the market, but the fact that you know 4 people who might, does? K

Alphabrew said:

So the fact that I wouldn't buy an MG at these prices has no bearing on the market, but the fact that you know 4 people who might, does? K

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Nope all anecdotal evidence.

The fact I bought a Mac for 2975 2 years ago and they are selling for $4500 is proof though.

More evidence.
http://www.thetruthaboutguns.com/20...-reducing-backlog-re-designing-eforms-system/

In 2005 there were 42,600 Forms processed
In 2013 there were 199,00 Forms processed for an increase in 380%.

smdub said:

You're both missing out. (not just NFA items.) If you can borrow money for less than you can invest it for, you can make money (and you can loose money.) It doesn't need to be quick turn either. I took a mortgage against my house to invest. Margin accounts are another. Borrowing money against assets you have to invest more. If you can't afford to loose the money, don't do it - that goes true for just about anything. But if you don't mind some risk (buying houses, silver, guns, etc all involves SOME risk so no one is completely risk adverse) the upside can be good. Being debt adverse will hold you back financially. Debt is fine, even good. You use a credit card right? Debts you cant cover - THATS whats bad. It takes money to make money. Even Warren Buffet borrows cheap money to invest. Leverage what you have to make more (within reason.)





You've harped on this over and over (and over and over in other threads.) I think you're 100% wrong (long term.) That you don't really understand investing show (to me) that you really don't understand the financial markets. See below:


How many MG shoots have you been to? Come on out and tell me how many rich baby boomers you see... (no doubt they exist but they aren't the majority.) Someone else will always have more money than you (or me or Warren Buffet.) As long as those people want to buy guns, either to shoot or sit in a safe, they will command more and more money.

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It's interesting that you snipped off the word "toy" when you quoted me as saying "I'd never borrow money to borrow a", and then went on to lecture about leveraging investments. That's largely attacking a straw man.

Underlying your entire argument is that MGs are investments. They don't produce anything, so at best they are speculative investments. I hope your "investments" work out for you, but I'm not going to investment my money in them.

ericoak said:

Nope all anecdotal evidence.

The fact I bought a Mac for 2975 2 years ago and they are selling for $4500 is proof though.

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Proof of a bubble?

Alphabrew said:

Proof of a bubble?

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More evidence.
http://www.thetruthaboutguns.com/20...-reducing-backlog-re-designing-eforms-system/

In 2005 there were 42,600 Forms processed
In 2013 there were 199,00 Forms processed for an increase in 380%.

Proof that interest in NFA weapons has exploded since 2005.

How good's your credit? Try an unsecured loan?

Just to toss this out there:

If you invested $10,000 in the stock market on January 1, 2013, your indexed mutual fund would be worth $13,200 today, exclusive of re-invested dividends. This even includes the major declines in the market we saw last month. Mutual funds are also more liquid than "hard assets" (such as houses, collectibles or firearms) - you could sell that mutual fund this afternoon if a need arose and you don't need credit to purchase it.

I do my own investing (no offense to financial planners/advisors out there), but if you are thinking of taking out a line of credit to acquire an investment, you might want to talk to a financial advisor.

I'm not saying guns are a bad investment (I lost everything in a boating accident a few years ago), the returns are certainly worth a look. But in your case, it may not be the best investment.

smdub said:

You're both missing out. (not just NFA items.) If you can borrow money for less than you can invest it for, you can make money (and you can loose money.) It doesn't need to be quick turn either. I took a mortgage against my house to invest. Margin accounts are another. Borrowing money against assets you have to invest more. If you can't afford to loose the money, don't do it - that goes true for just about anything. But if you don't mind some risk (buying houses, silver, guns, etc all involves SOME risk so no one is completely risk adverse) the upside can be good. Being debt adverse will hold you back financially. Debt is fine, even good. You use a credit card right? Debts you cant cover - THATS whats bad. It takes money to make money. Even Warren Buffet borrows cheap money to invest. Leverage what you have to make more (within reason.)

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Yeah, I understand your point. The main thing is the can't afford to lose part. For me right now, there is not much I can afford to lose. I have a Daughter with some pretty big medical issues that can just financially crush us at any one point. So the idea of trying invested borrowed money up in a long term investment is just not something I am willing to do now or in the foreseeable future. If I was single and had a good job, sure I would be not be debt adverse for the right investment. However losing the house due to a bad investment is not in the cards for the family right now no matter the possible reward. However, if you want to offer me 20 Colt M16s at $5K each... I will empty the 401K...etc and do what is needed to come up with the money, debt or not. So it really depends. When I buy and sell gun stuff, I am looking to make at least 50% or things I know I can sell. Any real risk and I am looking to at least double my money on short turns. There are is much to consider before going into debt.

ericoak said:

More evidence.
http://www.thetruthaboutguns.com/20...-reducing-backlog-re-designing-eforms-system/

In 2005 there were 42,600 Forms processed
In 2013 there were 199,00 Forms processed for an increase in 380%.

Proof that interest in NFA weapons has exploded since 2005.

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MGs as investments (assuming all those numbers are for MGs and not suppressors, SBRs and other NFA items) relies on that 20% annual increase in demand to sustain prices.

Alphabrew said:

It's interesting that you snipped off the word "toy"

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It was deliberate. No straw man. My entire paragraph wasn't about just toys. Though one could consider a lot of things 'toys'. I don't live in a huge house but my house is a 'toy'. Its larger than my family needs for just basic shelter. My point being the omission was intentional because the arguments stand.

Alphabrew said:

Underlying your entire argument is that MGs are investments. They don't produce anything, so at best they are speculative investments. I hope your "investments" work out for you, but I'm not going to investment my money in them.

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Real estate doesn't produce anything. You have a mortgage? Silver coins dont produce anything. I know you have those. They are ALL speculative investments. Even stock in companies that make something are speculative. Production has little to nothing to do w/ changes in value.

And value doesn't necessarily need to go up to be an investment. Its about preservation of wealth. Nearly everyone would consider bonds investments but they loose ground to inflation so you're still going backwards. But better than doing nothing. Something that outperforms another choice is the better investment if you're going to do one or the other anyway (either by necessity or simple choice.)

Its ok if you don't want to buy MGs. No one here is going to hold a semi-auto to your head

Alphabrew said:

MGs as investments (assuming all those numbers are for MGs and not suppressors, SBRs and other NFA items) relies on that 20% annual increase in demand to sustain prices.

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Those are for all NFA items (supp+sbr+etc). People have figured out that NFA items are cool and easier to buy than they originally thought.

Again, I don't think you really understand finance well. Increase in demand has NOTHING to do w/ sustaining prices. All that is required to maintain price is to maintain demand. Even with constant demand, price elasticity can drive prices up. But for sure increasing demand increases prices. His point was if some of those new people who are buying 200k new items annually get into MGs the demand is going to surge. How many people have one (and only one) NFA item? Its a slippery slope for most

smdub said:

Real estate doesn't produce anything. You have a mortgage? Silver coins dont produce anything. I know you have those.

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Real estate, like MGs, is speculative. Lots of people got HOSED leveraging real estate investments.

No mortgage but yep have gold and silver Eagles. Lost enough on them to buy a MG, too.

smdub said:

Those are for all NFA items (supp+sbr+etc). People have figured out that NFA items are cool and easier to buy than they originally thought.

Again, I don't think you really understand finance well. Increase in demand has NOTHING to do w/ sustaining prices. All that is required to maintain price is to maintain demand. Even with constant demand, price elasticity can drive prices up. But for sure increasing demand increases prices. His point was if some of those new people who are buying 200k new items annually get into MGs the demand is going to surge. How many people have one (and only one) NFA item? Its a slippery slope for most

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I have read this entire thread and some very good points have been made. I could'nt agree more that taking a loan to buy a MG is a bad move. I'ts kinda like trading stocks on a margin account, dangerous ground. I entered the class 3 market in 2008 when the economy went in the crapper and prices came down. People were losing jobs houses etc. and needed to sell and there were deals to be had. But like anything else you have to do your homework, just because it is full auto or has a happy switch doesn't mean it's a good investment. I went in knowing what I was looking for and what I was willing to pay. After a little negotiating I ended buying a very rare Colt M-16 / M-4 there are only around 20 in private hands. I paid 17k for it and easily get 25k + today so yes they can be a good investment but I don't think I would go in thinking that way but YMMV.

ROBAR35 said:

I have read this entire thread and some very good points have been made. I could'nt agree more that taking a loan to buy a MG is a bad move. I'ts kinda like trading stocks on a margin account, dangerous ground. I entered the class 3 market in 2008 when the economy went in the crapper and prices came down. People were losing jobs houses etc. and needed to sell and there were deals to be had. But like anything else you have to do your homework, just because it is full auto or has a happy switch doesn't mean it's a good investment. I went in knowing what I was looking for and what I was willing to pay. After a little negotiating I ended buying a very rare Colt M-16 / M-4 there are only around 20 in private hands. I paid 17k for it and easily get 25k + today so yes they can be a good investment but I don't think I would go in thinking that way but YMMV.

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Guys, again, I must point out. The OP was not making this loan to make an investment. He wants a MG and is willing to take a loan to accomplish this. This is really no different than taking a loan to buy a nice car when you could pay for a junker in cash. Or borrowing to buy a boat. The fact that he can likely make money on the deal in the end is not the main motivation according to what is posted. The term investment is not even used in the first post...

I would also point out in the above post. Houses were down and people were losing serious money on them. Cars were down. Boats were down. Any high end expensive items were down that were not made of Gold or Silver. Out of them all, MGs were doing much better on average and were much easier to sell in that period. I will grant that some real high end MGs like $50K M2HBs were seriously down, however most were only down little. In a time when investments in all except Gold and Silver were getting destroyed, MGs did ok.

The one thing no one has shown is any history of anyone seriously losing their ass on MGs. Needless to say doing the same with stocks, or Cars or Boats or Housing/Land or... whatever else is pretty easy to do. Even Gold and Silver often go down and stay down for long periods. MGs with few exceptions are up since 1984 with very few minor dips. They may not always make as much as other investments but I am hearing how dangerous they are as investments and no proof or history to back it up.

Having read this whole post I see some good pros and cons. MG's are IMO like vintage cars and art. Hopefully more ups than downs. Owning 2 I'd like to hope so. If you bought DIA's or MG's in 1980 you've made more than the stock mkt ever returned. I know people with a dozen MG's that never paid more than $1500 for any of them. Many now worth $40K. DIA's were $500. If you can find one now it will be $18-$20K. Suppressors and IMO , SBR's are depreciating assets.
To OP, would you be buying on a Trust? If so you could hypothetically make your lender a Trustee and that would simplify the repo issue. But if the gun got destroyed or God forbid confiscated because of something you did your lender would still be out of luck. You can get insurance for loss or theft. I'm guessing you'd have to pay a high rate of interest to off set that risk. Maybe even pledge something else as additional collateral. Another factor would be how long do you need the loan for? Just the 10-12 months to get the form 4 back? If that was the case it would be easier to find a private loan as the gun would be safe at a dealers during that time.

IMBLITZVT said:

Guys, again, I must point out. The OP was not making this loan to make an investment. He wants a MG and is willing to take a loan to accomplish this. This is really no different than taking a loan to buy a nice car when you could pay for a junker in cash. Or borrowing to buy a boat. The fact that he can likely make money on the deal in the end is not the main motivation according to what is posted. The term investment is not even used in the first post...

I would also point out in the above post. Houses were down and people were losing serious money on them. Cars were down. Boats were down. Any high end expensive items were down that were not made of Gold or Silver. Out of them all, MGs were doing much better on average and were much easier to sell in that period. I will grant that some real high end MGs like $50K M2HBs were seriously down, however most were only down little. In a time when investments in all except Gold and Silver were getting destroyed, MGs did ok.

The one thing no one has shown is any history of anyone seriously losing their ass on MGs. Needless to say doing the same with stocks, or Cars or Boats or Housing/Land or... whatever else is pretty easy to do. Even Gold and Silver often go down and stay down for long periods. MGs with few exceptions are up since 1984 with very few minor dips. They may not always make as much as other investments but I am hearing how dangerous they are as investments and no proof or history to back it up.

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See the OPs comments in post 18 where he uses the word investment and expresses concern about a bubble.

Past performance is not an indicator of future performance. Houses were rock solid investments, right up until they weren't. Luckily, I got my house just before the market started getting stupid, otherwise I'd be in a very different financial position. A lot of the people paying stupid prices for houses were like "if I don't get one now ill never be able to afford one".

"This time" is never different and what goes up must come down.

Yep, would be on a trust. Terms of the loan would likely be between 1-2 years.

Many have made good points about the dangers of taking on debt for speculative reasons, and I completely agree. You don't take out a loan to gamble. But people commonly take on debt for assets that they know will depreciate (car, boat) or ones that have an ROA that is more difficult to quantify (tuition, business loan, home improvement). I lost $70K in equity in the last few years agaist my mortgage... worst investment ever!

In the end, putting your money into anything comes with risk. The conclusion I've come to is if you are going to invest it, put it into something you enjoy that pays off in other ways. I regret losing so much on my house, but I don't regret buying it to begin with. I still need a place to live, and at least it's rent-controlled!

Everyone should read this book, written in 2005, to recognize self delusion and ********