Craigslist LEGO Flipping...A Newbie's Guide to Better Profits

This article attempts to describe Craigslist experience of buying bulk Lego lots and provide some lessons learned from newbie perspective so others can benefit from experience and hopefully not make same mistakes that I've made..

I've been fan of Lego since childhood, never really entered a dark age there was always a set or two or three around the house most of them were technic.  I seriously considered Lego investing 3 or 4 months ago and turned to Craigslist bulk buys to offset the burden of long term investment.  Below are my observations of the process, lessons learned and some real life examples of to date purchases.

Observations:

Targeting lots of sets is the easiest way to start- Buying Lego pounds and trying to resell them is a very difficult proposition, there are tremendous number of power plus sellers on E-bay that are doing Lego pound selling full time or nearly full time, competing with their prices, rankings in search results or supply sources poses a significant challenge to a newbie who is just starting out.  When you target Craigslist lots that have identifiable sets in them you at least know what you are getting and also know upfront the demand rate for those sets.

Determining Your Price Limit -Lot of set is quite a bit more expensive then paying per pound with prices in a hundreds of dollars you need to make sure that you can recoup this initial investment before money exchanges hands. Unless I get a distinct feeling from the seller that he is a builder going into dark age or he is a pack rat that never misplaces anything I usually shoot for a purchase price of the lot to be 50% of the market price of the sets in it or 20% percent off asking price whichever is lower.  This leaves me with a lot of wiggle room in terms of money I can spend on rehab and a healthy profit in the end, or so I hope.

Being a Fan of Lego is an absolute must-If you don't enjoy building, the whole affair will quickly become an exercise in frustration.  If you don't treat time spent rehabilitating sets ordering missing parts from Bricklink and then building those sets to photograph them for listings and then break them down piece by piece to verify completeness, as your personal fun time you will quickly realize that you are losing ton of money because you are making less than 2 dollars an hour.  If on the other hand you treat this endeavor as getting paid for something you are willing to do for free the process is quite enjoyable.  In my case I have a son who is a Lego addict and will build anything you throw at him as long as he gets a day or two to play with it and a better half who is willing to do a lot of dirty work like sorting and packing as long as she gets to build some of the Modulars with me.  In my case it became a good family past time that everyone enjoys.

Restraining an evil AFOL -As you will see in the examples below it is essential you restrain your evil AFOL side and quit while you are still ahead.  That means you have to remember at all times that the set you are building is not for keeps and once you reach a certain dollar point of missing bricks it's time to call it quits and stop hitting order button on bricklink.

Keeping Records

It is also important to cost each set in a lot purchased according to its relative market value weight this ensures that you don't overspend or underspend when rehabbing those sets.  Needless to say that you need to be very meticulous in recording cost of each brick, plus shipping, that you ordered for every set you are rehabbing.  Once you start selling newly restored sets you need to keep an eye on your profit margin per set as well as your overall lot profit margin.  It is tempting to make an overall profit margin of 30% on a lot but if it means leaving items sitting for year on Ebay waiting for their buyers, time value of money concept kicks in.  In those cases a lower profit margin in a shorter time frame is preferable to a higher profit margin over a much longer period.

Managing your expectations

Even when dealing with the upstanding citizens you cannot make a purchase expecting that everything will be as described. Bricks could be cracked small little pieces could be missing, some sets might be beyond rehab.  You have to be ready to spend more money on top of the purchase price before you can make money with any CL purchase you make.

Patience

You cannot be pressuring yourself into trying turnaround those lots for sale ASAP.  It takes time.  Bricklink is a great resource but it's wanted list feature is totally outdated.  Trying to get the best possible price for missing bricks for 40 sets in your lot is the most tedious and time consuming part of the whole process.  Allow yourself to get frustrated and you will quickly give up.  CL flipping will not make you 100's of thousands of dollars overnight but it will help you subsidize your long term investments as well as scratch that itch to build stuff if you are AFOL.  

Now let's look at some examples. 

The profit shown is net before taxes.  That is I accounted for E-bay/Paypal fees, postage costs, packing materials, bricklinked bricks and of course the initial purchase price of the lot. First lot I purchased was a 5 gallon bucket full of individually bagged smaller to medium sets Atlantis, Sponge Bob, Cars, Toy Story, and probably two dozen of Series 2-4 minifigs. Total cost for that lot $100. Purchase date mi December. As you can see there were 47 identifiable set/minifigs in that lot.  To date I turned in a healthy  30%  profit and I expect the remaining sets to bring my profit margin to 41%.  This was a case of a pack rat and is atypical from what I've seen with my other purchases.

Lot2-Was purchased around Christmas time and included mostly complete Star wars sets including 7676, my favorite.   Of course now that 75021 re-make is on the shelves the profit on this lot is uncertain, but I essentially broke even on it so I am not too concerned.  Here is how this one faired. Purchase price of that lot was $100.

  The first two lots  made me fancy myself an expert in Craigslist buying and then I purchased Lot 3. With this lot  I decided that it would be a good idea to play Russian roulette with a semi-automatic handgun and then when the gun functioned as intended I decided that I want to do it few more times.  A shorter version of it could be an Evil AFOL awakes.  Dealing with upstanding citizens buying first two lots made me believe in general goodness of human kind, lot 3 had proven me wrong.  Craigslist ad described a lot of 8 99% complete  sets including 7659, all minifigs and manuals.  My first clue that something was off should have been a really hurried kid that seemed very anxious to be on his way, but AFOL was salivating over Slave I in the open box so money exchanged hands. When I got home none of the minifigs were present, 7659 was not there and surprise the sets were not 99% complete they were about 75% complete mark.  Evil AFOL was at full swing hitting order button on bricklink ordering minifigs at  13 bucks a pop.  Below is the result of that fiasco.  Needless to say that when the responsible female population of the house found out, it got really loud I think the nicest thing I heard was something about looking for wife number 3, my eardrums were rupturing so I cannot be sure.  Purchase price of this lot was $190 and it was purchased around Christmas time as well. Bulk of the expenses came from minifigs, had I bought just missing bricks I would've broken even.  

  While recovering my hearing on the couch late at night I figured that it is time to get back on Craigslist and got my next lot. This one was the most fun  of them all It had  40 mostly complete sets from the 80's and early 90's, some of them I remember from my childhood.  5978, 6073, 6076 were just the few.  Purchase price was $500.   And the numbers for it are below.  This one and the promise of not building Parisian restaurant by myself put me back in good graces with the Mrs.  

The last lot I purchased was for 7 Harry Potter Sets and two star wars sets.  When I started sorting thru them, I quickly came to realization that this lot had 12 Harry Potter sets, all of them with minifigs, but no manuals.  This one put me back on track.  Here how this one turned out.

And here's the overall performance of my purchases to date.  As you can see if you keep yourself in check you can expect 20% or more in net profit  in a relatively reasonable period of time.