Buying art for investment

Many people buy artworks, making the purchase a suitable investment is another thing from simply liking the work or the artist. Here is a list of nine ways to be certain the works you want to get for investment will be worth it in the end and make a rock solid investment.

Image courtesy of Dan from freedigitalphotos.net

Image courtesy of Dan from freedigitalphotos.net

  1. Buy things you like, for the most part you will have the item for an extended period, if you like it you are less likely to sell it in a rush and want a premium for it. If it is hung at home you will enjoy the investment more.
  2. Buy top quality. Top-quality items are expensive; however, can appreciate even in poorer market times. Medium-quality items may only keep pace with inflation. Limit yourself to a medium where top quality is within your budget.
  3. Maintain the item properly with appropriate environmental conditions and regular maintenance. If repairs are required, they should be done by well-trained experts.
  4. Keep good records, when it was bought, how much it cost are al important things to know to figure out the return on your investments.
  5. Insure the item adequately. Most homeowner policies allow for fire and theft but not natural disasters, such as floods or accidents. Have your works included on a scheduled form of all risks for coverage in the event of theft, fire or breakage.
  6. Know the artist, research them, do they have a solid background of winning suitable high level awards? Do they exhibit and produce regularly? Are they well represented in commercial galleries? Are they held in reasonable regard by critics, their peers etc? Does their work have conceptual depth… is the supporting ideas and though processes behind the work consistent and have depth?
  7. Know the style, medium, techniques, similar works and artists. There are many styles, techniques and similar works and artists know all about them so your collection can be built from a knowledge base rather than an “I like it approach”. First and foremost it is an investment, like a blue chip company on the share-market you want to know that it has a solid foundation. Do your ‘due diligence’ as you would on any investment.
  8. Think Blue Chip, There are thousands of artists and artworks on the market, you want to buy works from those who produce blue chip works – The works will last, done to a quality standard. The artist is supported by critical acclaim and peer reviews
  9. They sell well, In the secondary market, auction houses etc. The works by an artist in your collection readily sells and is purchased at a higher value than what it was bought for. This applies mainly to older artists and those from history. A number of younger artists and some galleries may offer works for sale by auction to build an artists reputation early in the auction arena. Research is important here.
  10. You bought it where? Galleries of all types abound, some are renown for the style of works they carry, some will sell anything, some have a focus on framing and the gallery is secondary to them. Other galleries can be artist run spaces and may be seen as a platform for showcasing newer artists and project works. Know about the gallery you want to purchase from, discuss with them the investment potential of the works you are wanting to buy. Buying online can be fraught with challenges, not seeing the works, knowing most people online seem to buy a ‘bargain’ rather than buy for quality sake, let the buyer beware.

Art can be a very practical investment opportunity, like anything you need to know what you are getting into. Will it appreciate in value, will you be stuck with something you can’t sell? There will be many questions, in the end it’s up to you to decide, but please do so with the solid support of knowledge through practical and well informed research.

Gallery Dreaming

I was a little surprised at the gallery staff for not acknowledging me as I walked in and out of their Galleries in the USA. A far cry from being acknowledged MOST times while doing the same thing in Australian galleries, I think it’s good customer service..

At first I through it was rude, and then I considered they might have always been this way and we just do things different ‘down-under’ then my thoughts turned to economic reality. If they have been doing it tough due to the global financial meltdown then they probably would be focussing on the top level investors, rather than the possibility of a walk in retail sale or in my case a walk in viewer only.

I have heard the galleries there have got ‘serious’ about the way things happen, if you want to purchase a piece from a high end gallery you had better make sure you are ‘worthy’ of having the piece, it’s no longer enough to be able to afford it but you need to show you are going to add value to the mix. Somehow you need to show you are a Visual Arts zealot, willing and able to promote Visual Art, Not going to JUST hang the piece on the wall at home or in an office where the general public never gets to see or appreciate the works.

With so much high level thinking and posturing about the guardianship/ownership of Art works, it’s no wonder the galleries showed little acknowledgement of my presence. In fact I should be pleased they let me in at all, perhaps they will one day develop a scanning device which will only let in those who meet exacting standards of “Artistic merit”.

Art Galleries (esp. commercial spaces) have long fascinated me with their various approaches to showcasing art, how they select and or reject Artists, how they support and nurture them. So to see the USA approach should not have surprised me so much as caused me to realise Art Galleries are still fascinating places to observe and connect with.

Collecting and investing in Visual Art

Collecting Visual Art is generally considered to be a past time for the wealthy but has become far more accessible and therefore a positive option for investors who want to seek out its rewards.

One of the big attractions to Visual Art as an investment medium is the recognition of its long term performance by investors who have taken the time to explore and research the Artists and artworks across broad guidelines. It is an asset class which can have the potential for solid growth and can balance out an investment portfolio of shares, property and venture capital.

Investors have often diversified their portfolios in a range of standard asset classes but with market fluctuations, investing in Visual Art becomes a stable, longer term tangible asset with strong growth potential. With less volatility, this asset class often provides solid peace of mind for the astute investor looking for long term growth and solid income streams.

Visual Art purchased wisely, demonstrates a capacity for this asset class to be a long term store of wealth. The true investment value comes from purchasing quality items knowing they are a finite commodity, an asset which can not be repeated.

Investors can enter the market at various levels, and get great results however it often requires suitable advice, appreciation of the Artist, the works you want to acquire and good guidelines to follow. Then the investor should be able to make prudent purchases and in the process become involved in supporting Visual Art Culture.

Buyers of Art

Lets try and create some starting points about who buys art and why… I’m not saying this is a definitive list by the way, but a way of understanding the buyers basic motivations. There will be much more to this and for the artist wanting to sell their work they may well find the following information useful in connecting with buyers. Feel free to add comments tot he article so I can add more information or details as required if you have another view or three.

gallery-pic

Buyer profiles:

I like it – Colours, lines, shapes, tones, subject matter, scale, composition, price,. Any and or all of these (and maybe a few others) become the motivation for buying a piece, this is usually supported by a justification “It will look good where I want to put it.” Mostly it’s about decoration or showing something they believe is beautiful. Long term value as an appreciating artwork, negligible. “I don’t know much about art, but I know what I like…”

I like the artist – They probably like the artworks created by the artist, the style etc as well as the person… Perhaps they have not met the artist but have been told about them by a gallery. “You really should look at the work of..” These buyers often connect with the person, then the art, they will then have a story to tell, “We met this artist and wow!) They are not so interested in the longer term value of the work, perhaps wishing it’s value may rise as well as having decoration value. “We met the Artist at the gallery, got to see their studio later on and now we know more about them and their inspiration, we really like the work too!” – “The Artist is a good friend of ours and we love their work as well as them, great to have one of their works in our collection.”

I like the price – An art work is purchased above a certain amount, the gallery is renown for having works which are above a certain value, the buyer knows that, the buyers friends know it too. so to have one from “X Gallery” becomes a status symbol. No mention of the price is made and any interest in the artist is often cursory. This can happen at any level in the art field from decorative works, through to contemporary art and prices though to many thousands of dollars. They say they are informed by the gallery the value of the artists work will rise, but who knows… “The gallery has taught me a lot about this Artist and their work…”

Secondary market buyers – “I like works already with some value to them, the artist is often better known, has a track record of success in some way and their works are valued by others enough to make it to the secondary market.” Auctions of artworks are usually the way these buyers get the works. They could be building an investment portfolio and are linking their budget to the works and the propensity for the art to appreciate in value. “I put into action my knowledge of the Artist and art-world, coupled with information from the catalogue and other sources.”

Institutional – These are Gallerists and Curators buying for larger organistations. They may be looking for works of significance from certain art eras, works and or artists whose value may have had critical acclaim, or their works may hold some deeper cultural or contemporary interest, providing some measure of value, perhaps as an investment and as a culturally valuable piece. “We buy works of broader cultural value first and foremost, the fact many of these may appreciate in financial value is often secondary but a nice bonus.”

Patrons – “We buy works by specific artists sometimes and also because we like the works and or we like the concepts communicated.” Call them rich, eccentric or whatever, these people are great patrons of the arts, often holding large collections revered by the art community at higher levels. It could be a show of status but often in a more demure manner. “We love following the work of Artist X, but we also buy others too, we don’t flaunt the collection to others we just love to support the wider cultural fabric of society.”

Investors – “We want works, which will appreciate in value, yes we buy what we like too so if we get ‘stuck with it’ we can live with it.” Using a broad range of information to make (hopefully) effective buying decisions to collect works which will provide a financial return. Coupling knowledge of works, academic information and investment trends for the works to make informed decisions. The works can be sourced from the primary or secondary markets and sold at auction later on. “It’s an investment first and foremost.”

Copyright © Steve Gray 2010+

Tax ruling could benefit artists

Check the article, great for Australian Artists…

http://stevegray.com.au/blog/australian-tax-ruling-benefits-artists/

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Art Investors and Collectors, what do they want?

“Creativity is allowing yourself to make mistakes.
Art is knowing which ones to keep.”

Scott Adams

I did some thinking about this topic today, and then followed it with some research via the web and coupled this with my own experience as well as what I was “taught” at Art School.

I think we should take this type of material into account when we decide, the “business of Visual Art” is important to us and we wish to encourage Investors and Collectors to purchase our works. These two groups would have to be the main target markets Artists would aim for.

Investors and Collectors of Contemporary Visual Art, look to the following pointers to assist them in the purchase of art works which will appreciate in value. By looking at what’s out in the marketplace a new comer to the idea of investing in Visual Art might soon become confused by the quantity of artists, the diversity of styles and media, not to mention decorative works, leisure art and reproductions. My hope is the list below will provide a basis to start from.

Basic Points

Deeper Points

To add to this the collector may have in mind the level of work they want.

There are no absolute guidelines as to which points are better or stronger which a collector or investor might use but these are points for discussion or contemplation at least. Perhaps the big thing about all this is how the Artist communicates all this to the prospective buyer.

Compiled and edited by Steve Gray Contemporary Visual Artist © 2009+ If you want to see more articles like this as they are published subscribe!

10 tips for investing in Visual Art

Record-setting prices are being paid for art created in the last one hundred years. For a time it seemed as if Van Gogh’s work would remain the most valuble of recently auctioned pieces. But now other artists are bringing in the multimillions per work as well.

Investing in art for the average person must take on some very different dimensions. Yet, buying, collecting and selling art can be interesting – even profitable. There some things to remember 
when you are shopping for art – especially as an investor.

1. Remember that the odds of finding a De Kooning at a garage sale is infinitesimally small. His works, as are those of many artists, were seen, bought, catalogued and stored almost as a public record. The people who bought De Koonings along the way stood to make multimillions as well, if they held onto the works.

2. Find artists whose works interest you, and get to know those artists. Communicate with them about their work, their prices, their career objectives. Try to acquire the best examples of their works that are available.

3. Negotiate on price – which is not easily accomplished if you are after their largest or most accomplished pieces. Price can be tricky, but don’t let it cause tension between the artist and yourself. Remember, heart felt appreciation of an artist’s works go a long way to softening negotiations. This doesn’t mean you should be insincere in your flattery, but do be expressive.

More words on prices. Bartering is not out of the question. Smaller and less accomplished pieces should be less expensive. Sometimes buying more than one piece gets a discount, or buying on a regular basis. Buying works after an exhibition, or before an exhibition on the condition that they are not sold during the exhibition, can bring some discounts. Telling the artist his/her work will be shown prominently and giving out the artist’s cards should be a given if you want discount prices.

4. See how well the artist is received by other buyers or the art community generally. Do not expect the best art, art prices, or art investments from the best-known artists or the artist commanding the top prices. By the way, these do not necessarily go hand-in-hand. When galleries “discover” an artist they usually increase the artist’s prices. Your job is to discover the artist before the next big buyer or gallery discovers them.

5. Either pick classic, timeless themes in artwork, or be very aware that you are picking niche-interest or local-history themes. Abstract and nonobjective works happily don’t have this problem.

6. Try to focus on artists with a recognizable style. This does not mean a generic, academic, or knock-off style. The style should be as original, different, and strong as you and your friends can tolerate. Investments usually have to be cutting edge, by the time they are blue chip it takes big money to get into the game.

7. Diversify your collection across one or two axes and buy as many as you can show in your house, office, or apartment. You can buy one from each artist or several from a few different artists.

8. Choose artists who are productive and well-grounded in the process of creating. Be careful of artists who are (or act as if they are) “suffering artists” or confounded by life, etc. This does not mean you should turn away a legitimate bargain because the artist really needs money. Artists should be judged on their work, not their profile or personality or their press hype.

9. Take good care of your art, it will appreciate rather slowly on average. And, yes, price hikes may not start until the artist dies. This doesn’t mean you should follow only elderly artists, but you might want to make sure your children or friends share some of you interests in your selected artists. They may be the caretakers of your investment one day.

10. Don’t sell your art until you get good offers. Check the market for other transactions on art from your artists. Don’t expect to make a quick killing – the stock market only works like that if you are an insider or you are a very wealthy opportunist waiting on a sure thing.

There are a lot of other things you can learn to increase your ability and taste for art buying and investing. I will write some other articles on this topic in the near future.

Art, a “boutique” investment?

By Michael Russell

Buying art is considered a ’boutique’ investment or something that is off the beaten track. However, is this really the case? Unlike other forms of investment, economic conditions do not affect the art market much.

The art scene has its own rhythm, mostly influenced by the artist’s quality of work and excitement of the collectors. It has more to do with cycles. Basically, art investors would only buy a piece which they think will increase in value in the future and bearing in mind that art is a mid to long term investment.

People who bought art produced in the 1960s have managed to secure 500% returns on investment. However, the pieces are done by pioneer artists who started their careers in the 1960s, or earlier.

New collectors need to practice caution and not be carried away with hype and expensive art. When it comes to art investment, it can either be a costly or affordable endeavor, so it all depends on the investment.

Potential investors might initially be turned off by the price of art. However, you can start off with lesser-known artists whose paintings are relatively cheaper. You can start with as little as $500 and build up your collection from there. The initial cost of buying art would depend very much on the artist. Pioneer or seniors can command prices ranging from $40,000 to $100,000 while works from second-generation or mid-career artists range from $10,000 to $50,000, depending on the size.

So, what is good investment value? There are two important factors; style and consistency, which depend very much on the artist’s commitment level. The investment value also depends significantly on the artist’s track record, which includes their exhibition record, collection, marketability and length of career (new, mid-career or senior).

Artists with good track records are often popular. However, popularity may be hyped up. Price and quality do not necessarily go hand in hand. More importantly, it’s the psychological worth that determines the price. Similarly, investing in established artists doesn’t necessarily guarantee good investment value either as sometimes their work can decline.

There is a suggestion for collectors to buy works of artists who are growing in value rather than those who are at their peak. Works of mid-career artists are often considered to have potential for higher investment value. On the other hand, works of most pioneer or senior artists, have reached their price ceiling.

For collectors who are particularly new and budget-conscious, consider works of young artists, as they are more affordable. There is also a chance that the painting’s worth might double or triple in five years’ time.

The art world is not easy to navigate, especially for new investors. Getting to know artists, movements, genres and periods is one part of the problems and becoming competent at identifying works of art can take a long time.

You need to identify your own taste, so ask yourself why you like certain art and dislike others. Serious art investors also need to know which types of art sell and which do not. Moreover, talk to as many people as possible, from curators and gallery owners to artists.

In many ways, investing in art is like investing in your taste, which is why loving what you buy is important. People who buy art because they love the piece, end up getting very good investment value.

Whatever the reason, you may not always get great monetary returns from an engaging art piece but it can provide you with a lifetime of visual pleasure.

Michael Russell

Protecting your art investment during a recession

By Judith A Tartt

During a recession, it is vital to protect your assets. If you’re an art investor, you may be wondering, “How can I protect my art investments during a recession?” Following are three steps you can take to do so.

Three Steps to Protecting the Value of Your Art Investments During Troubling Economic Times

1. Don’t Panic and Sell: One of the things that happen during a recession is that your assets can lose value. This limits your ability to sell it to generate income if you should need to. And, like a real estate investment, who wants to sell in a recessed market?

In this case, the best way to protect your art investments during a recession is not to sell. Instead, look for ways to cut expenses and hold onto your investment for when the market corrects itself, which leads to the second way to protect your art investments, staying liquid.

2. Sustain Liquidity: As alluded above, some may find it necessary to sell their art investments during a recession to make ends meet. This is usually because they don’t have enough cash on hand to cover expenses for an extended period of time.

Many think of art investors as rich or well-to-do. And, some are. Many, however, are average working folk who’ve been lucky enough to sock a few hundred or a few thousand dollars into a piece of art – this is all an art investment is.

As ordinary working folk, art investors should follow the financial planning advice almost everyone who’s not Bill Gates rich should follow – keep enough cash on hand to cover six to eight months of expenses (or more if you can afford it).

This way, you won’t be forced to sell an art investment you’d rather keep – and watch appreciate – for years to come.

3. Don’t Over Invest: As in, don’t pay too much for a piece. As an art investor, how do you prevent over investing in a piece – especially if you’ve fallen in love with it?

Quite simply, you learn about the artist, specifically: (i) are they represented by an agency; (ii) what have their other works fetched; (iii) what are some of their recent showings; and (iv) what do their art reviews say.

Knowing this type of detail will give you a clear indication not only of the current value of the piece, but its likely future value as well.

Over and beyond this, get an official appraisal from a qualified, certified art appraiser.

Protecting the value of your art investments during troubled economic times is not hard. It’s the same as protecting any of your assets – pay attention, don’t panic and sell, and keep ready cash on hand to handle day-to-day living expenses.

If you do these things, you can ride out volatile markets – and profit from your art investments during boom times.

Investing in art – A starting point

If you are curious to invest in something else than real estate or stocks, art might be an option. Previous investment experience (in real estate or in financial markets) will most certainly determine your approach when exploring Art investments.

For example; if you are fully focused on short term profits, in which case your investment approach resembles speculation, than you are able to use this approach in what ever investment field. It may be more difficult because of the money (and time) that is required but real estate speculation or speculative stock trading is done by a set of familiar rules. And so will it be when investing in art.

If your (financial) investment approach is more fundamental and you are more committed to a specific way to invest and concerned about the companies to invest in, than this will lead to a different investment game. Especially when focusing on art.

This commitment is what makes art worth while to invest in. You could be committed to creativity in general. In that case you can’t hardly do anything wrong, because you could defend every investment with your own story – “this painting is special. I know the artist is not very well known, but that’s exactly why I’ve bought it.” You invest because of your own judgment and according to your own criteria.” 
This kind of investment approach resembles the stock-picking method in financial investments, you buy what others ignore.

The next thing would be to follow the market, and search for (popularity) trends of artists. This is much less fundamental and resembles technical analysis; stock A is rising and you imagine that it will continue to do so. For a while. This requires little knowledge is provides a good starting point for next steps in which you may broaden your investment scope.

As in the financial investments area, there is also the art-investment guru. The advisor who knows all the ins-and-outs about investing in art. He or she will first (have to) ask you what your preferences are, because also that is not different from financial investments; it starts with the question, “what do you want.”

Buying an Art investment Fund is probably the best thing to start with. It offers you a lot of information and while having set your first steps in art-investments, you can think of what you really want. Probably something different; well, it is.

© 2006 Hans Bool