You love horses and you think it might be nice to own a racehorse. Do you really know what you are getting into? Take this quiz before you head out to the stables.
Investing in a racehorse is so full of risks it is usually considered a high-stakes gamble rather than an investment.
Racehorses are a unique investment due to the high costs associated with maintenance and care. A racehorse can quickly become a money pit as expenses outstrip any income due to associated fees, taxes and veterinary bills.
The best way to buy a racehorse is to join a partnership or buy out an existing partner in a syndicate that already owns a horse. According to Investor Advisor, partnerships sell shares in racehorses much like a Fortune 500 company operates.
According to Mike Brunker of NBCSports.com, 60 percent of racehorse owners had an annual income of $75,000 or less. Perhaps they could have earned more if their racehorse actually won some money.
Horseracing is not just a sport. As an investor it is important to remember that horseracing is a business. Racing a horse that you own is a time-consuming and expensive business.
According to David Wharton in the Los Angels Times, you can realistically expect to pay at least $60,000 per year in expenses for each racehorse you own. A racehorse is not exactly an investment that you want to own when you have a small bankroll.
The racegame.com suggests that training fees can run around $34,000 per annum if you race your horse nationally. Not quite the fee you would expect to pay a personal trainer to get you in shape.
The more that a horse wins, the more the horse is worth. The key to making money on a racehorse investment is to acquire a winner.
According to theracinggame.com, the owner of a winning horse will usually receive 60 percent of the purse. That is a very nice slice of the pie, especially if it is a high-stakes race that your horse won.
As quoted on PBS.com, the thoroughbred Fusaichi commands about $200,000 for a stud fee. Considering the fact that Fusaichi was retired from racing at a young age, he could potentially sire hundreds of offspring.