Just because you have money doesn't mean you have to spend it. In art collecting it can actually be a disadvantage to be flush with cash, at least when you're a beginner. I say this because it's harder to resist the temptation to purchase art when you have money. Even if you're a financially disciplined person, art can play on your emotions and you can find yourself spending more freely than you ever have before. Take the time to learn about the kind of art you want to collect. Unbelievable deals don't come around often, and they rarely come to beginning collectors. There will always be quality art to purchase. The best thing for you to do is take your time and learn, learn, learn about the artists or category of art you want to buy. When you feel that you're ready to take the plunge and buy a piece of art, be sure to learn as much about the artist as you can. Especially examine the artist's auction records if there are any. Auction records are not definitive, but they are very helpful.
Narrow down your collecting interest as much as you possibly can. You can like all kinds of art, but it will serve your best interests to narrow down the scope of your art collecting interests as much as possible. The more you narrow down your collecting interest, the more of an expert you're likely to become in that particular area. One of the greatest joys of collecting art is learning so much about an artist that you feel almost like you know him, or studying the period of history in which the art was developed. The more this is done, the greater your appreciation of your collection will be, and your enthusiasm and knowledge will be evident when you show off your collection.
Yes, you should buy a piece of art because you love it, BUT take the financial aspect into consideration too. It has become a cliché in the art advice business to tell people that the best thing for them to do is buy the art that they love. This is good advice, but somehow hidden in that statement seems to be a subtle message to not take the financial aspect of the piece into consideration. I say buy the art that you love, but also make sure you're not paying too much for it and consider your end game. I wouldn't advise asking, "How much money can I make on this painting? Or How much will it appreciate?" Rather, just be sure that you can recoup your investment. Tragedies can happen, and sadly what people first consider selling to raise money is their art collection.
Buying work by a deceased artist is generally less financially risky than buying art by a contemporary artist. This is because the art market for a contemporary artist has not really been tested. Most deceased artists have some kind of record of sale on the secondary market, whether it be at an auction or a gallery. This record gives you an idea of what is an appropriate price to pay for a work by a certain artist.
Just because a painting is signed "T.C. Steele" doesn't mean T.C. Steele actually signed it or even did the painting. What often happens is that a family member, often a wife or son or sister, signs an artist's paintings after he dies. If this is the case, it decreases the value of the painting. Of course, an "artist signed" painting could also be a forgery. I've seen plenty of paintings that bear the signature of an artist who clearly didn't do the painting. An art appraiser can assist you in determining the authenticity of a signature or painting.
Just because a desirable artist did a painting doesn't mean that the painting is desirable. Every artist had his good days and bad days. Some had more bad than good. Certain periods of an artist's work are also more desirable than other periods. Also, if an artist is known for painting landscapes, a painting that he did of a cat is probably going to be much less desirable. The medium is also important in determining desirability. Overall, oil paintings tend to rank as most desirable; however, there are artists who work in all mediums but whose watercolors or prints are more in demand than their oil paintings.
There are a lot of great deals on eBay. There are also a lot of fakes, junk, inexperienced sellers and shippers, and hucksters. eBay can be a great place to learn about art, but it's not usually where the best pieces by an artist appear. This is because the best pieces are usually brokered between dealers and their clients. Occasionally, such pieces make it onto eBay, but usually through live auctions. eBay can also be a financially risky place to buy art. The number of fakes, questionable works, and bad paintings on eBay is quite high. Unless you are an expert in a particular category of art or on a particular artist, I'd avoid buying on eBay until you're sure you know what you're doing. Even then you can still make mistakes. (e.g. buying a print that was described by the seller as a painting, getting an excellent buy only to receive the item damaged because it was improperly packaged for shipping)
Most art dealers aren't dishonest, but the dishonest ones have a radar for those who want to be quickly parted from their money. When buying a painting from a gallery or dealer, try to find out as much as possible about where the painting came from. Provenance enhances the value of a painting. Also, if the price seems to be out of line with similar pieces you've seen by the artist, ask the dealer how he came up with the price. He may have very sound reasons for the price difference (or you may not be familiar enough with the artist), but if he becomes defensive or combative, be suspicious.
Pricing art is an art. It's also part science and speculation. Art is not a commodity. Therefore, there are significant variations in price, even among the works of one artist. It's not unusual for an artist to have a high auction sale price of over a million dollars and a low one in the hundreds or low thousands. This happens for various reasons, usually related to size, medium, and period created. Always remember, any price can be put on a work of art, but there's no saying it's worth the tag price until it sells. Also keep in mind that pricing art is not formulaic. There are dealers out there who are intentionally trying to rip people off by making them overpay for art. But most dealers use all the knowledge they've spent considerable time acquiring; they research, they talk to other dealers, and then they come up with what they consider to be a fair market price for a piece.
Don't be an art day trader. Unless you are an art dealer, I don't advise buying paintings and quickly trading or selling them for something else. I have not met a collector yet who has not lost money doing this. And the collector usually ends up frustrating the art dealer he's dealing with in the process.