Financing Strategies For Gear Acquisition

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Marc Alan Goodman
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Post by Marc Alan Goodman » Fri Apr 05, 2013 7:50 am

Jim Williams wrote:I'm not so confident on the economy. Something's gonna have to give with world record debts and uncontrolled spending. A collapse is inevitable.

Question is: can you second guess when that will happen and will you divest to cash in before it does? Can you second guess market values and audio fashion?

1929, 1988, 2001, 2007, many lost $$$. Few saw it coming.

Will you?
Are we talking about the stock market now? That's a pretty different subject than we started with.

People in 1929, 1988, 2001, and 2007 only lost money if they sold their shares before the market went back up. Right now it's at an all time high. Every one of them would have made money if they could wait. I don't think that relates to gear purchases very well.

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Post by Jim Williams » Fri Apr 05, 2013 8:51 am

No, I don't do stock markets. It's a comment on the state of the economy and the future of audio fashion piece investments. Those years were followed by bad economies.

Now you know why I "invest" in pure silver audio cable. When shit comes to shove I can melt it down and make coins.

In the future, currency will become a bar of silver, a sharp knife and a gram scale...
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Post by vvv » Fri Apr 05, 2013 1:08 pm

Jim Williams wrote:
In the future, currency will become a bar of silver, a sharp knife and a gram scale...
In some places here in Chicago that's already the case, except for the bar of silver being a brick of that sparkly-sound stuff, of course. :twisted:
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Post by calaverasgrandes » Fri Apr 05, 2013 4:37 pm

First off, I will admit that I dug myself a really deep hole with my first business. I was doing okay renting sound systems and started to get some decent traction with the DJ/corporate events crowd.
So I bought a bunch of powered speakers and other PA gear.
Then 9-11 happened and I lost my other gig. So I was stuck with 3 credit cards carrying a ton of debt. Took me until last year to get out of that hole.

So yeah, stay the kcuf away from credit cards!

OTOH I have bought quite a lot of gear using Sweetwater/AMS/Zounds 3pay (or 5pay or 12pay) payment plans.
It is pretty nifty to pick up a big old analog synth and pay for it in installments. Just like lay away, but you get to play with it sooner!

I'm actually about to head over to AMS and put some QSC K12s on the pay plan. Getting sick of using my bass amp for my synths, besides, I need to play out.
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Post by Jim Williams » Sat Apr 06, 2013 8:35 am

vvv wrote:
Jim Williams wrote:
In the future, currency will become a bar of silver, a sharp knife and a gram scale...
In some places here in Chicago that's already the case, except for the bar of silver being a brick of that sparkly-sound stuff, of course. :twisted:
On the news it said Tide detergent is now the currency of choice there.
Last edited by Jim Williams on Sat Apr 06, 2013 12:05 pm, edited 1 time in total.
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Post by T-rex » Sat Apr 06, 2013 9:47 am

What just happened?
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Post by cgarges » Sun Apr 07, 2013 4:36 pm

So, how many of you have stories about continually buying the cheapest shit possible and then either turning a profit on it or at the very least, breaking even, ten years later? I know I don't.

I mean, people can do whatever they want, but the reason my gear collection looks like it does is because I was able to "trade up" by relatively small outlays of cash and eventually start "trading sideways." In terms of the original post, I stand by my assertion that maybe taking a piece of equipment's long-term resale value into account when buying is not a poor idea.

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Post by vvv » Sun Apr 07, 2013 7:23 pm

That's a very good consideration.

But as a simplistic but recent example using mic's, I have a Shure SM7b and a Peavey 520i. I find the latter just as or even more useful than the Shure, but the re-sale values are hugely different (150%?)

Also, look at how the current price of Unidynes is through the roof, and check out how the prices of vintage EV RE's (other than the 20), old Beyer ribbons, etc. have in the last year gone up. But the Senn MD421 (one of my faves) and 441 just stay stable.

It can be kinda hard to predict ...
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Post by fossiltooth » Sun Apr 07, 2013 10:11 pm

Oh god. Please don't let the Tape Op Message Board get taken over by cranks talking about hoarding gold and pursuing austerity. If all of modern civilization collapses we have more to worry about than the stock market and the price of gold anyway! Although in the interest of adding a little much-needed variety, I liked Krugman's imitation of Stockman's recent half-baked op-ed in the Times:
"We?ve been doomed, yes doomed, ever since FDR took us off the gold standard and introduced unemployment insurance. What about those 80 years of non-doom? Just a series of lucky accidents. Now we?re really doomed. I mean it!"
Before we get too far off topic: History suggests that you'll often find bubbles in collectibles markets. You might get lucky and cash in on the bubble. But more likely, you'll find out that the bubble exists when it's already been inflated; When prices are already sky high, and you've found yourself convinced that you need exactly the same prestige-imbuing toy that everyone else reading the same things thinks they need.

There was probably a bit of a vintage console and module bubble in recent years. My best guess is that, for the long term, the market prices are going to stabilize lower than they once were. Of course, whenever a new stock bubble crops up, people get eager to turn their imaginary stock value into imaginary collectible value... So it could inflate again. But I'm not so sure.

Here's one thing you may have noticed: The stock market is back up, but gear and guitar prices aren't up so much, are they? My guess is the next collectibles market in music will probably crop up in some new place. Realistically, I doubt the value of Neve consoles will continue to rise much more in the near future. Their value may hold if everyone's lucky, but I think most of the increases that were going to be made, have been made. They're just not a realistic (or even desirable) purchase for most studios anymore. That effects pricing considerably. (Then again, all this is just one guy's guess. Which, really, is all we've got: Guesses.)

As a side note: Anyone here about that Harrison console that was used to make Thriller? It just sold this year. Original asking price: $2 Million. Finally sale price: $17,000. (To be fair: the console was known to be a headache, and that the seller came across as a bit of a crackpot, which probably helped lower the value considerably.) Meanwhile, a vintage U47 is worth about what it was in 1947: About 1/5th the price of a new Cadillac. It's supposedly one of the best "investments" in the pro audio world, and its value has essentially held static for 60+ years once you take inflation into account.

Anyway, I'll say this much: There's one good reason to buy a piece of gear: Because it will be useful to you. If you get lucky and its value goes up, great. But I wouldn't bank on it. Just do great work. That's an investment you can count on.
Last edited by fossiltooth on Sun Apr 07, 2013 10:40 pm, edited 1 time in total.

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Post by fossiltooth » Sun Apr 07, 2013 10:15 pm

Oh yeah, and back on topic: Like everyone said, stay away from credit card debt. Do not even consider it an option.

Marc's right to say that bank debt, should you qualify, can be alright -- Especially at the interest rates we have now. If you're going to buy gear and do upgrades, the best time to do so is during a down economy anyway. Just ask Andrew Carnegie. Or any economist who... you know... understands how economics works. (No, Stockman doesn't count.)

Just remember that you have to factor your loan payments into your overhead. You'll also have to present a feasible business plan to have a chance of getting a loan, which is probably a useful exercise anyway if you're planning on doing this professionally. Even then, it's notoriously difficult to get a bank loan for a music studio business. That was true even when the music market was kicking ass, like 15 years ago.

If you can't justify the added monthly expenses from a loan, don't take them on. Recording studios do not operate on a "if you buy it they will come" basis. Better to do what most successful studios do: Buy gear because you're getting good bookings and you want to put the revenue somewhere that will qualify as a business expense, (hopefully) hold its value, and will be fun for you to use.

My advice: Don't just buy gear hoping it will get you clients. Get the clients first. The extra gear comes out of that. That's what I tend to see it at truly sustainable studios, anyway.

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Post by Gregg Juke » Sun Apr 07, 2013 11:46 pm

Here, here. No crackpots, pleeaasse.
"Gold Standard." Pfph.

(What I _really_ need are more .22 cartridges. And Jim, where do you get that silver cable?)

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Post by Marc Alan Goodman » Mon Apr 08, 2013 8:00 am

fossiltooth wrote:My advice: Don't just buy gear hoping it will get you clients. Get the clients first. The extra gear comes out of that. That's what I tend to see it at truly sustainable studios, anyway.
Once again our resident wordsmith explains things in the clear, concise manner I adore and admire. Can we just delete this whole thread and put that as the sole answer to the op's question? It'll save future users a lot of confusion.

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Post by llmonty » Mon Apr 08, 2013 2:13 pm

While I generally agree with the good an concise answer above, it may or may not answer the OP's question. He never mentions clients nor the need to run a business.

I took it as what are the best ways to acquire gear for the least cost/hassle. Buying used? OK or not? For what things.
Over time? What sites? Do I really have the time? What do I need now?
All at once? Do you get volume discounts to make it meaningful?

Financial instruments and sources? Cash or Credit? Which cards/vendors, etc.
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Post by calaverasgrandes » Mon Apr 08, 2013 6:16 pm

What I really hate is reading an interview with a producer/artist/studio owner and they inevitably get into the "how did you start" question. Too many times they do say they buried themselves in debt and then worked 10 years of 18 hour days in a row. As if that is something to aspire for!
There was some studio owner in Tape Op a whiel back that specifically said he maxed out hi credit cards to get his business off the ground.
May have worked for him, but imagine how many guys just ended up selling their gear off a few years later and then finally retiring the debt once they got a job at the local life sucking cubicle factory.

Sorry did I get semi autobiographical there?
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