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With the economy in a state of flux, asset prices mixed up and generally not making much sense to those in the know, let alone those in the dark, is it such a stupid idea to invest your money in an Italian sportcar when you could buy a one bedroom investment property for the same price? I don’t think it is, in some ways….

Before you look at your calender to check that it isn’t April Fools Day, please indulge me. By my reackoning, both of the potential investments are roughly the same price (assuming you don’t live in London where property prices are wrong). A Lamborghini Gallardo costs £130,000 on the road, and you can comfortably buy a 1 bedroom investment property for the same amount.

Now conventional wisdom would say something along the lines of “don’t do it you fool, think of the depreciation!!!!”. However, in the current economic climate, and property market, you’d be hard pushed to find much difference between the depreciation on the car against the investment property.

According to these property price predictions, the general opinion is that 2008/2009 will see the following falls in UK property prices:

• 20% - Morgan Stanly
• 25% - Nationwide
• 25% - Savills
• 20% - London School of Economics

Which does not paint a very rosy picture, and this comes off the back of news recently that the UK property market has already declined by 16.2% in 2008 according to Halifax.

So given that a Lamborghini Gallardo would depreciate in the region of 20% year 1, then 10% a year thereafter, for the next couple of years at least, it will hold up well against an investment property.

But what about the yield I hear you say. Yes, what about it, I can tell you that with very little efford you could achieve a much better yield on the car than you could on the house. Yes, that’s right, I genuinely believe you could get a better yield on the car than the house!

Let’s look at some realistic figures here. A 1 bedroom property is at best going to rent at a yield of 6%, so if it costs £130,000, that gives you an annual rent of £7,800 (assuming it’s rented for 12 months of each year…).

How much could you rent the Lambo out for? Well this depends on what you do with it. You could rent it out to your friends and family and colleagues and most likely make a better return than the property. Or alternatively you could build a small part time business around renting the car out for track day experiences or even as a posers’ car for the weekend.

Track day experiences for this sort of car start from around £25 a lap, some of this will be eaten up by fuel, track fees, insurance, financing and depreciation. But if you get the model right, there will be plenty of demand for these experience days at the moment. Think about it, thousands of out of work bankers, thousands left in the industry without a six figure or for the lucky few (thousand), seven figure bonuses this Christmas, they must be looking for cheaper thrills, perhaps this could satisfy that need?

And of course, you could simply rent them out by the hour in the City - normally bankers and City types would have just bought a Lambo or a Ferrari - but as I’m sure many of you will have heard the joke:

What’s the difference between a pigeon and an investment banker?
A pigeon can leave a deposit on a Lamborghini…

No doubt this joke has an element of truth in it!

In all seriousness, I’m not suggesting everyone should go out and invest in a Lambo rather than an investment property - simply illustrating the point that property prices are falling at rates similar to the depreciation on a thoroughbred sports car. And in light of this fact, coupled with the fact the sportscar could have a far higher yield, and with the tax relief you get on business expenses related to the running of the car, and its’ depreciation, it could actually work out a better investment in the short term. Who’d have thought it…

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