Gentleman’s Handbook, Vol. 10.2: Investing in Rare Vinyl

We’ve reached peak vinyl. Can you turn a profit?

By The Editors
February 18, 2016 9:00 am

This is the Gentleman’s Handbook, a recurring series on all the lemons life will hand you and how to prepare accordingly. This month: being a smarter investor.

People who love buying and selling vinyl as much as Adam Rosen are music lovers first, and investors second.

Rosen is the owner of Shuga Records, a collector’s goldmine of a music enclave in Chicago. By day, he’s the guy folks seek out when they’re trying to offload a Velvet Underground record for $25K. By night, he’s scouring Ebay for test pressings and original acetates to add to his personal collection.

If you’re reluctant to think of vinyl — which was pretty close to being a dead medium a decade ago — as an investment, you’re not alone. It is indeed a rarefied pursuit, a conservative market that certainly has limits. But there is room for profit in this niche: a recent 45-box archive from Godfather author Mario Puzo is set to fetch $400K.

We asked Rosen for tips on making the most out of collecting rare vinyl, and which issues stand to appreciate in the coming years.

Image from Shuga Records Chicago/Facebook

On the resurgence of vinyl …

“When talking about the resurgence of vinyl, you have to understand the Nielsen SoundScan and what stats record labels are putting out there. What they fail to mention is that it only applies to new vinyl. What we’re really talking about is a switch from a used vinyl market to a new vinyl market.

New vinyl reissues don’t necessarily mean the original goes down in value. Take the the Beach Boys’ Pet Sounds: the reissue — most likely a digital version slapped on vinyl for kids playing it on their Crosley record player — costs $20. The original is worth $100 to $200 and up, depending on condition and pressing. A smart investor knows that first pressing will only go up in value.”

On what what eras and genres sell the best …

“It’s more like, ‘What’s truly rare?’ You’ll always have a fan base to cater to. Really rare classical records. Really rare psych records. Northern Soul does really well for us. The real question is what’s ‘one-of-a-kind?’

Love for Elvis, for instance, only grows with time. You have Jack White who upped me and 100 other people and bought Elvis’s first test pressing for $300,000. I can’t afford that. So I tell myself whenever I see an original Elvis Presley, or even Johnny Cash, to buy it. Last week I bought Elvis Presley’s first Sun Records 10-inch 78. It’s going for as high as $11K. I got it for $450. I’ll never sell it, but basically I’m trying to call it — buying music I love, and music I know other people love.”

On condition and quality …

“Condition is always the most important thing. If it’s say, a Beatles record, what I’m looking for is a record that Grandma Jo bought and never played because she was really listening to Perry Como. You’re looking for pristine. Complete.”

On storage and archiving tips …

“If you’re gonna do it right, every record should have a new sleeve. Keep ‘em sealed if you’re gonna keep ‘em sealed. Always store records upright, never on top of each other because they warp.”

On where to procure, research and buy …

Discogs is huge. But my favorite resource out there is Popsike. You can search the market to see what’s sold. Going to a real record store to ‘dig’ is not a reality anymore. And to be honest, it shouldn’t be. The chances of you finding a $5 record and flipping it for $1,000 are literally the same chances of winning the lottery. Ebay auctions and sellers are where it’s at. That’s a business unto its own.”

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