Let’s talk about how guitars work as both assets and investment pieces. We already know the popularity and appeal:
- They serve as a function to make music
- They have been popularized by musicians from Hank to Hendrix to Clapton
- Guitars are highly collectable
There are several factors involved that separate the ‘value’ and ‘market desire’ for guitars. The most compelling factor is a guitar that they do not make any longer… could be a vintage era, coveted production era or a limited series run.
Think of a home as an example. History tells us they can appreciate in value over time however some far more than others. A suburban starter home surrounded by tracks of newly developed homes that are being built works well for a family, but not necessarily an investment. It can be replicated and is being replicated by the hundreds. Appreciation in value could be a decade away or more. Let’s call this the ‘standard production guitar’. Great to play however not investment grade and will likely depreciate in value at first. THEY KEEP MAKING THEM.
Then compare this to a home in an upscale, well-established and well-located historical neighborhood that has decades of appeal and desire. Price point is higher and so too is the value and desirability. This example is the ‘Investment Grade’ category I am referring to with guitars. Great to play and will appreciate in value. THEY DO NOT MAKE THEM ANYMORE.
That all said, banks and traditional lending institutions do not recognize assets such as guitars, watches and jewelry, etc… Their focus is based upon homes, real estate-based income properties, cars and cash. Understandable; volume is king… large amounts with low returns using well established means of valuations. Why mess with what works!
Our focus is based upon what the banks don’t accept. Period. Guitars are our niche and we look to dominate the category by providing a scaled version of what the banks do with higher returns.