Investing resources in artworks requires due perseverance, tolerance, and commitment to seeing it generate profit. The great advantage of investing your money in artworks is the prestige factor that no other investment vehicle can match. All types of investment have a risk factor and although investing in artworks may not be always profitable but it’s the most enjoyable way to do it.
Choose what Kind of Art Buyer You Want to be
You have to choose what sort of buyer you want to be before you purchase your first artwork. The three types of art buyers are a dealer, collector, and investor. The different types of art buyers vary in the way they acquire and sell their investment in artworks. The outcome that the art buyers seek also differs.
The collectors choose the artworks that they like without giving so much attention to the outcome of their investment. They concentrate their efforts on a particular niche and they usually become experts on the path that they have chosen. Their collection focuses on the artists and subject that they favor.
The investors are focused on income that they will earn from their investment in artworks. Unlike the collectors, the investors know exactly what they want to accomplish when purchasing a work of art. They have exit strategies in mind before buying any artwork. They usually project to sell the artwork within 5 to 7 years from the time of purchase. The investors don’t buy the artworks that they like but those that they expect the collectors will like. Their usual target of return on investment is 25% or higher.
The dealers are into arranging business transactions of artworks. The focus of the dealers is only exclusive with investment artworks. They spend most of their time dealing business on the phone with fellow dealers, investors, galleries, collectors and auction houses. It’s a wise thing to study how the dealers transact their business in order for collectors to gain profit in their endeavor.
The Different Categories of Artworks
You should be aware that there are three categories to consider when buying an artwork. The first one is decorative art which does not increase in market value as time passes by and its primary use is to decorate a particular venue or home. The second one is collectible art that has some market with agreeing on collectors. Collectible art is not considered a viable long-term investment. The last one is investment art that has a great potential to increase in value after a few years.
It is in investment art where you want to invest your money. Investment art is created by well-listed artists which are desired by dealers, investors, and collectors alike.
The experts, art historians, and connoisseurs set the standards that classify investment art above the rest. Investment art is internationally recognized and high value of the pieces are established because of this. Only minimal effort is needed by the seller to gain extra profit from selling investment art.
What are the drivers that make the investment so much valuable?
The drivers that make investment art valuable are the rarity, quality, and scarcity. The master’s touch is reflected in the artwork when it is of superior quality. It’s one of a kind artwork because only a few artist has the talent and skill to deliver an exceptional work of art.
Scarcity of the artwork also places a major role for it to become a trophy piece. An example is when the artist has already passed away or came from the past century. Only a few pieces of artwork will be available and that adds up to its value. These type of artworks are really desired by collectors, dealers and investors.
The same thing with rare artwork pieces of superior quality, the art buyers are willing to pay top dollar just to have them. Rare artworks are considered priceless.
Invest Your Money on Art Fund
The art fund works like a private investment fund. It has already been in existence for about a century and is now a hot item for investors. The investors put in the money and an expert team purchase the investment art.
There are art funds that acquire artworks directly in the museum for the needed improvement in provenance and strengthen and increase their value. The art fund sells the artwork for a profit within a span of 5 to 8 years. There are art funds that focus on just one medium. While other art funds are diversified just like the Fine Art Fund in London.
The great advantage of an investor is that it’s easy to join an art fund because you don’t need a large capital because an investment can go low for less than the price of a single artwork. Another great thing is that you don’t have to worry about the upkeep and insurance of the artworks.
There have been reports of art fund scams and that’s why you have to do your research and invest your money well with those firms that are known for their integrity.
Your Art Collection as a Leverage for More Artworks
You can use your Art collection as a collateral to buy more artworks. A great advantage of using this strategy is that you can buy the artworks that you can’t normally afford. There are boutiques that can give you non-recourse loans. Use this strategy wisely to gain more profit.
How to be a Wise Buyer
You should buy investment art that is dated and signed by listed artist who has numerous auction records to increase your chance of gaining more profit.
Concentrate your efforts in finding artists who have at least 200 paintings in their lifetime, who has exhibited in major shows. Major exhibits are done in the Paris Salon, The British Royal Academy, and The National Academy Design.
The school of art of the artist should still be in high demand most especially coming from The California Impressionist School, The Brandywine School, and The Hudson River School.
It would be great if you enjoy the artwork you buy. Appreciate it’s beauty and enjoy it financially for the profit you will gain after a few years time.
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