Last night I enjoyed a panel discussion about collecting art as an investment. The panelists were experts from Christie’s and an economist who manages a public art collection. Of course the big question on everyone’s mind was how can one navigate such a subjective industry with the confidence that he will come out on top, monetarily, with the art work he has purchased.
This way of thinking is parallel to how many consider their real estate transaction.
If I buy this home will it be a good investment? Will I make money when I’m ready to sell? Should I get the condo with a balcony or city views? I don’t have a particular want for a balcony, but other people do. Will that help my value?
The problem with this kind of thinking is that we can’t see the future. You may think you have found the next Warhol, but what if you buy a piece from that artist solely for the expectation that it will increase in value and a year or two down the line that artist chooses another career and his fame never takes off?
What if you move into an up and coming neighborhood only because you think the home values will rise and you want to get in at the bottom, but 15 years down the road, when you are ready to move again, Starbucks still hasn’t moved in and the neighborhood is still called “up and coming”?
Neither of those cases are likely to give you a good ROI. So what does work?
First and foremost in art buying and home shopping you should go with what you love. You have to live with it after all. In both cases your ROI is never a sure thing, but you can feel more confident about it by looking for quality. If the art was well constructed and has been well preserved it is more likely to hold its value. If the home was constructed with quality materials and the space is well utilized it is more likely to hold its value. Keeping your home up to date in style and in good repair is another way to protect your investment.
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