From “Forbes Magazine
This story appears in the Dec. 5th issue of Forbes, p. 212, titled Beyond Art By The Yard. Click here for the full Investment Guide 2012 special report.
After retail real estate developer Tony Greenberg and his wife, Anne, moved into a 7,000-square-foot contemporary home in Westport, Conn. in 2008, they started to fill it with the quirky modern art they love. Up went the op art paintings and prints Tony’s grandmom collected in the Sixties—pieces he had rescued from his mother’s basement.
Then the Greenbergs, both 36, started adding to their collection of pop surrealist works. They spent $5,000 to $9,000 each for three plastic “dissected companion” sculptures (with x-ed-out eyes and visible internal organs) by street artist KAWS. Finally they splurged on “Flower Hairpins,” a 5-by-6.5-foot painting of an Asian waif by Thai artist Sung. Tony won’t say what they paid, but Sung’s large paintings now start at $75,000. “I look at it as part of our alternative investments allocation,’’ he says. Buying art by emerging artists is always a gamble, but who knows?
Whether you’re a young entrepreneur with big ambitions and big walls to fill or an empty nester looking for that perfect piece for a downsizing condo, buying original art can be fun—and addictive. First it’s a hobby, then a collection and then an alternative investment.
What’s the dividing line? That’s up to you. Pick an amount you’re ready to spend on art “consumption.” If you’re going to spend more, follow these tips and you might make a profit—or at least avoid losing your shirt.
Pick art you can live with for a long time. Find a period that speaks to you. The reality is that the vast majority of art can’t immediately be resold for as much as you paid for it, and few galleries will take art back, so you should buy works you’re pretty sure you’ll want to live with for years. Don’t just focus on one artist from your chosen period. Sprinkle money into various artists—at least one or two might be winners. Buy the best examples of each artist’s work you can afford.
The biggest profit can come if you buy a living artist before he or she hits it big. John Currin’s satirical and arguably sexist paintings sold for $100,000 a decade ago and fetch over $1 million now. But don’t risk your retirement kitty making this kind of bet: The contemporary art market crashed in 2008 along with the S&P.
If contemporary art isn’t your taste or is too speculative for you, good buys can be had in old masters, 19th-century English landscape painting and Americana, such as weather vanes and Shaker boxes. You can get an original work by an artist who is listed, but not celebrated, for $5,000 or less. While the upside isn’t there, you can likely resell a piece in ten years and get your money back or more. “It won’t climb in value like a dot.com, but it’s quite safe, like a blue chip,’’ says Harold Porcher, director of modern and contemporary art for Doyle New York.
Another strategy is to seek out artists (or movements) that might be in for a revival, says Porcher. For example, one client in the early 1990s paid from $1,000 to $5,000 each for dozens of American abstract works on paper produced from 1927 to 1945. Now the collection is worth at least double what he paid, Porcher estimates. One savvy move: The collector pursued a museum exhibit and landed one at the New Britain Museum of American Art, adding cachet and value to the works.
Consider hiring an art advisor. An art advisor, much like a financial planner, can help novices avoid mistakes. An advisor can also typically snag discounts at galleries, which might pay for his or her fees. Art advisors will work on retainer for a percentage (10% is common) of what you buy or on an hourly basis ($150 and up). Warning: Anyone can call himself an art advisor, so you’ll want to check out an advisor’s professional training and call references. The Association of Professional Art Advisors website is a good place to