How to Invest in Rare Books
Investing in rare and antique books bears a close resemblance to other collectibles like guns, stamps, an violins. Likewise, this hard asset holds lucrative profit potential and is also nuanced with low-liquidity levels, which makes an investment in rare books appealing for those who are willing to do their homework and stomach the inherent risks.
The value of a book is largely dependent on four main factors, which are: edition, condition, scarcity, and desirability. As you might expect, first editions are most valuable and desirable. This is because the first edition of a publication tends to have the least number of copies relative to future editions, thus creating the element of scarcity. In the case of a trilogy, more often than not, the first book in the series will generally command the highest price. Be wary when you are shopping around because a book is not considered a collectible just because it is really old.
As with any hard asset investment, the rate of return realized varies from person to person. For example, Ernest Hemingway's "Three Stories and Ten Poems" was valued at $6,000 in 1977, and it sold for $150,000 at an auction in 2004. Another example is Jack Kerouac's "The Town and the City", which was valued at $2,500 in 1978 and was auctioned off for $40,000 in 2004.