Anyone Heard of/Tried Rally Rd.?

[CJFusco]

Through several advertisements on social media, I've become aware of the investment opportunity called "Rally Rd." -- it's basically marketed as a way to invest in collector cars without buying a bunch of collector cars. It seems as though an organization has a private collection of rare cars (356 Speedsters, 1960s Ferraris, etc.), people can invest in "shares" (around $50 each, from what I understand), and the value of the shares rises and falls based on valuations. At least, that's what I'm gathering.

My first reaction was, "oh, so it's tricking people into funding the maintenance/care of some rich guy's collection," but then I realized that it's not much different than how the actual stock market works. So, assuming that everything's on the up-and-up, the program could actually be a legitimate investment opportunity.

So, just wondering if anyone here had come across this program, or knows anything about it. I must admit that I'm intrigued, as I love cars and am always looking for worthwhile investment opportunities. For all I know, this could be a great opportunity, a novel-yet-flawed idea, a worthless gimmick, or a scam -- I honestly don't know.

Any thoughts?

https://rallyrd.com/

[brainz01]

Interesting. I'd not seen this. At some point, all car-loving Wall Street types have pondered whether you could put together securitized offerings for collector cars.

Based on what's on the website, it appears they've found a way to do it within SEC guidelines. That said, being SEC compliant doesn't make something a good investment.

It appears that each car will be its own separate series of stock with its own offering memorandum (OM), which is similar to a prospectus. That makes sense given that each car is intended to be separately investable/tradeable. But they don't post any OMs on the website and not sure if they are available on the app as I've not downloaded it yet. Without the OMs, we're missing a lot of key information.

As you highlight, one of the key questions is what the carry cost is and how such is applied to each car (costs like management, storage, maintenance, and insurance). Per the website, the individual cars have their own LLCs and appear to be taxed as C corps, which makes me wonder if there is some sort of cash escrow that gets funded on IPO for each car to pay carry costs. Or is there some mechanism to address cash shortfalls for overhead? There does not appear to be any hope of income, only appreciation (or loss) upon sale, so I'm not sure how the cars "pay their bills". I'd be surprised if the envisioned capital calls from investors.

Missing on the website are the full bios of management and the board (and their compensation). And how does the IPO allocation process work - - are they Dutch auction style or does someone handle allocations? What about shareholder governance and minority rights?

Overall, I like the idea, but unfortunately, there's not enough info on the website to form an opinion on what they're doing or whether it's a decent investment.

If anyone has any details from an OM or elsewhere, please share.


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[john70t]

What kind of future growth potential is there? (Is collectable cars where the future 2%'ers park their big money?)
-vs-
What kind of liabilities exist? (Admin, insurance, storage and utilities, maintenance, moving costs, selling costs, etc)
What incentives to perform and collateral guarantees exist for investors? (Can those people put it all in a briefcase and fly across the world to a seaside club without extradition tomorrow?)

[pwd72s]

Good luck!

[jhynesrockmtn]

A friend and vintage racer in town has had a successful CPA career. He's also amassed quite a collection of cars and a few motorcycles. Mostly Porsche 356 and 911 but also has an MGA twin cam and a few interesting American cars. The value of the collection has grown immensely. He's also got a shop on a separate piece of property to store it all. I wonder how the return would stack up against an equity based portfolio over the same time period if you factored in the costs of maintenance and storage?

[CJFusco]

These are all very good questions, and it appears that some of you know a lot more about the investment world than I do! I am thinking about trying out a (very) small investment and tracking it over time just to sort of learn the ins and outs of what they're doing. Thinking about it.

[pwd72s]

Originally Posted by jhynesrockmtn

A friend and vintage racer in town has had a successful CPA career. He's also amassed quite a collection of cars and a few motorcycles. Mostly Porsche 356 and 911 but also has an MGA twin cam and a few interesting American cars. The value of the collection has grown immensely. He's also got a shop on a separate piece of property to store it all. I wonder how the return would stack up against an equity based portfolio over the same time period if you factored in the costs of maintenance and storage?

With very few exceptions, equity portfolio wins. But that's just numbers on paper. You can't drive a portfolio. On the other hand, the more stuff you have, the more stuff you have to take care of. When you get tired of caring for stuff....well, your decision.

[Deschodt]

Every classic car mag advice section says not to buy classic cars for profit but for enjoyment, and if there is profit, then great... I think if classic cars have become trendy enough to cause the creation of such funds, the cat is already out of the bag and you are on the tail end on the profit, looking at a crash...

At least if you did this for yourself you could drive the car... As a fund it's purely investment, I think 10y ago it would have been a phenomenal idea if you had the foresight. Now, less so.

PS: To jhynesrockmtn's point, I've thought the same. 8-9y ago I kinda saw this coming and took money out of a poorly performing retirement fund and bought a 68 912s and a 72 911. One to keep, one as investment, but the math is the same.. I did the math a while back, and while the profits looked pretty good in isolation, it's mostly because as car guys we are used to losing value to depreciation more than selling for profit, I think.. once you do careful accounting and factor storage, maintenance and repairs, tax/title/registration, insurance, and possibly taxation on the resale profit should you choose to declare that, it's not that much of a return... not even close to buying GOOGLE or APPLE in the same time frame. Fun though....

[LakeCleElum]

Back in the late '70's, I seriously considered buying a few wind turbines when the market was just getting under way.

What finally turned me against it was: All the people ahead of me in line making a buck before I did. It was the land developer, the person leasing you the land, insurance, taxes, maintenance contracts, etc. Besides the taxes breaks that expired in a few years.

I stand to a make a lot from classic cars and motorcycles someday.
But - I bought at the right time and have owned some for over 25 years.......It's not way to make a quick buck overnight....

Best to keep your ear to the ground and snap up the "Barnfind" before others are aware....

[onewhippedpuppy]

Originally Posted by LakeCleElum

I stand to a make a lot from classic cars and motorcycles someday.
But - I bought at the right time and have owned some for over 25 years.......It's not way to make a quick buck overnight....

Best to keep your ear to the ground and snap up the "Barnfind" before others are aware....

Key point here, and where I think this company could fall flat. They have all of the sexy collector cars that I can't afford, and that's great for the eye test but misses the key point above. The time to buy a 1972 911S was 10 years ago, not today. All of today's collector cars have already seen huge gains in value, the real future is predicting what will be a collector car in 10 years. Honestly the place would probably have more future value if their collection was full of stuff like unmodified STis, Evos, S2000s, Supras, FD RX-7s, etc.