Someone posted a link to the USA Today article on the LEGO sub-reddit on reddit.com.

http://www.reddit.com/r/lego/comments/15menn/usa_today_wrote_a_great_story_on_lego_as_an/

There really hasn't been much love for this site on there in the past, but I noticed we were getting a good amount of traffic from there today and wanted to see what was going on.

I noticed a comment that I have seen on this site before and a few other forums.

"This is why we can never find clearance lego or the larger sets on Buy 1 get one. These aholes hoarde all the sets at the expense of our children. Screw them , wont be buying their 129 dollar asking price for Minecraft lol."

I honestly don't care about being called an "ahole", but its the fact that I have read several times that the children are the ones being affected by LEGO collecting and investing. Maybe I am missing something, but does anyone really feel that this is true in anyway? I personally think there is more than enough supply during production periods to cover any LEGO lover to get the set they want. Even the Minecraft set was available on the LEGO shop for the past several days.

Anyhow, I was just blown away again with the fact that I read this type of comment again (maybe have seen it 5 times before this as well). I was glad to see a few other users told them it was a stupid comment, just wondering what anyone else thinks

So WTF are you doing here? Just here to tell everyone how dumb their side business/hobby is? I mean if we can't get into the investments you're in since we are general public then WTF are you even talking about? No one here but you seems to think anyone is trying to get rich doing this... ...you kinda come off as a condescending prick who likes to hear himself talk.

Very well thought out and written response......I do disagree with you on what you claim as a "cop out" for me anyway, I could care less if the market tanks because I really do want to build all the sets I am holding. I wouldn't loose one second of sleep if the sets were suddenly worth nothing......well maybe I would because I would be building.

I can assure you that there are quite a few sellers out there that EARN 1 million+ in profit (NOT sales) on flipping LEGOs. It can be done whether you believe it or not.

I can assure you that there are quite a few sellers out there that EARN 1 million+ in profit (NOT sales) on flipping LEGOs. It can be done whether you believe it or not.

Earning $1 million a year in profit on flipping Legos? Seems a bit of a stretch to me.

For example, to make $1 million a year you could purchase at $5 million in Legos and sell it at $7 million (40% markup). Minus about $1 million in costs (20% = selling, carrying, shrinkage, insurance, etc.) leaving you with $1 million in profit. That would be 20% in profit which is unusual but not unheard of in business. If your profit margin is less, say a more normal 10% to 15% then you would need to sell more than $7 million to make $1 million profit.

Selling $7 million a year is selling $19,180 a day, every day of the year in Legos. I'm sure Big Box companies do way over that but someone 'flipping' Legos doing that much? Still seems like a stretch requiring huge warehouse space and multiple people shipping, buying, accounting, etc. That is 192 hundred dollar Lego sets sold/shipped a day and there would need to be corresponding purchases to replace the inventory sold.

While it is certainly possible it would be difficult to sustain purchases that large at 40% off. But if you can't get 40% off retail sales price then you will have to purchase more than $5 million and sell more than $7 million to make $1 million in profit.

Anyway I look at it makes it hard to believe for me.

I would agree that I do not understand the micro investing of LEGO...I will easily agree that there is a lot of labor involved, and it has to be time consuming, regardless of how seamless others make it out to be. I just look at the effort for the return...and it's simply not enough. I accustomed to earning much bigger returns. Then again, I have also sustained some pretty big losses. Regardless, I am still way ahead.

I'm confused about the capital gains statement though...paying taxes is just part of the game. I have never not invested because I would have tax implications. As far as I understand it with eBay, or with any business, report the income, and pay the taxes. If you are not set up as some sort of legal entity I think you can claim up to a certain amount as hobby income, but I'm no tax guru, your accountants can better advise you.

The control aspect of most investments is an illusion in my opinion. You may have control over one thing, but not everything. If I understand this particular class of speculation correctly, the control you have are what your entry price is, and I guess there is some satisfaction to looking in your closet and seeing your investment, although that is not really a control. But other than the entry price, what else are you in control of?

With the case of Apple...well it's pretty simple if you ask me. Their visionary is dead. No more magic devices are being innovated. The decline was predicted, and a lot of people made a ton of money shorting the stock down from 600-500, and there are still people out there doing it daily. Even at $450 it is still a bargain, and do not forget the dividends. The company will return an entire share purchase in dividends in 5 years. That's money making money.

I am also a business owner, and I'm sorry to hear that yours is off so much. I can not say the same for mine. I'm in the stone, concrete, and glass business. Our demographics are really, really wealthy people, and we do it all from the smallest stonework to huge retaining walls. It's all about positioning. I do know that people are hurting out there, and that really sucks, but it is not the same for everyone. Some people are thriving and have been.

I have read the consensus, and you are right on with your demographics. Everyone seems to be "doing this for fun." So I say keep having fun. Who really cares what one random person on the internet thinks?

Cheers,

BrickBroker

I would like to first state that Jeff and I appreciate any and all constructive comments, whether they are positive or negative. We have encountered such a high degree of intelligence in our short time as the creators of BrickPicker, that we often take member's ideas and incorporate them into the site. We have accountants, financial planners, engineers, etc...as members on our site and they help us with some basic financial and statistical facts and figures. Jeff studied computer science in school and I was a biochem major, so we have very little experience in financial formulas and terms. We listen to people and learn. You mentioned "carrying/holding costs" and I learned something. I knew what it meant, basically, but know I know the term to describe it. So thank you.

The way I figure it(because you told me so), you sell "brick" and masonry items, hence the name "Brick Broker." We all assumed you resold LEGO bricks...LOL. Silly me. This would explain a lot of your comments and how many of us misread them. I can also assume you probably found our site through the USA TODAY article, because you probably scan such publications for ideas on investing and LEGO investing intrigued you, but eventually learned that there was a lot of effort and time involved to achieve the ROI that we talk about. You probably have no real interest in LEGO bricks, just the money aspect of it.

LEGO "investing" is not for everyone. As stated numerous times already, it takes time, space, effort and some luck to make money...with an emphasis on space. I don't think LEGO investing can yield the total dollar returns you seek unless a concerted effort was made in labor and facilities to flip hundreds to thousands of LEGO sets. It sounds like you are willing to write a big check and take a big chance, but don't want to get too dirty. You just want to let your money ride the old fashioned way, through stocks, gold, bonds...the traditional methods. That's cool with me. Millions of people do it and do well with it. I have and still do as well.

I disagree with you on the control issue. Stock markets are way more volatile and unpredictable than LEGO sets. I can pretty much tell you what sets are going to be top performers, but stocks are way more fickle. Apple stock hit it's record high about a year after Steve Jobs death. People were predicting that Apple could hit $800-$900 a share several months back, yet it started tanking for no real reason. It might be a good value at $450, but tell that to the guy who bought it at $700. A LEGO set is never "worthless." The bricks have value, sometimes more than a set if parted out. A valuable stock can become worthless and the people who work for the company and own the stock have very little control in stopping the slide(Lucent).

As for the tax issues, I realize that all Americans have to pay taxes on income. I pay my fair share. That being said, many online auction sellers, whether legal or not, do not pay taxes on their sales. At some point, I would like to have a member who is an accountant write an article for the site explaining what a LEGO reseller is responsible for tax wise.

I am glad to hear that someone is doing well in this economy. I own a car wash and quick oil change in NJ and business is off 40% over the past 4-5 years. I speak to all sorts of business owners and they all tell me similar stories. Costs are up, incomes are down. There is a disconnect in this country from the "rich" and the rest of us. I'm happy that you can benefit from their resources. Good thing I have LEGO investing to make up for my losses. ;-) Thanks for your quality posts and look forward to hearing from you again...

Ed Mack

Just to shed a little light on your tax responsibility for selling LEGO online - if you sell LEGO online and take in payments through Paypal, then Paypal will report your activity to the IRS if you have more than 200 transactions or $20,000 worth of sales in one calendar year.

So if you hit one of those marks than look for the 1099-k in the mail because you will receive one, and the IRS will have your numbers.

You have to Make over $20,000 and do over 200 Transactions before Paypal sends you a 1099-K and the IRS. Its not one or the other its both. And say during last year you bought 10 items, anything and you returned them, well the 10 things you returned are called Charge backs and the 10 things you returned count toward the 200 transactions.

Am I the only one who really enjoyed BrickBroker? If nothing else, a reminder that turning a profit can be tricky in any pursuit.

Am I the only one who really enjoyed BrickBroker?

No you weren't.

No you weren't. Who was BrickBroker?

Am I the only one who really enjoyed BrickBroker? If nothing else, a reminder that turning a profit can be tricky in any pursuit.

Brick Broker had some quality points and posts like his serves as a wake up call to many who pay attention. As for taxes, yes the $200.000 limit and 200 sales is known by many sellers, but they find ways around it I'm sure(multiple PayPal accounts). Right now there are major tax loopholes in the system and people take advantage of them, but they are slowly closing, as the Feds and State agencies need more to support themselves. The internet tax issue will be a huge tax boon for them in the near future.

As for profiting a million dollars a year flipping LEGO sets...It's possible, but I guess it is a retail business at that point...isn't it? It is no longer investing or what we are talking about on this site in my book. I really don't know of a LEGO retail site, besides the major ones, that do that much business. These Mom and Pop LEGO sellers on eBay and scattered throughout the internet charge way too much to sell the volume needed to "profit" a million a year after expenses.

So Ed, have you seriously never sold any of your Lego investment items yet?

Earning $1 million a year in profit on flipping Legos? Seems a bit of a stretch to me.

For example, to make $1 million a year you could purchase at $5 million in Legos and sell it at $7 million (40% markup). Minus about $1 million in costs (20% = selling, carrying, shrinkage, insurance, etc.) leaving you with $1 million in profit. That would be 20% in profit which is unusual but not unheard of in business. If your profit margin is less, say a more normal 10% to 15% then you would need to sell more than $7 million to make $1 million profit.

Selling $7 million a year is selling $19,180 a day, every day of the year in Legos. I'm sure Big Box companies do way over that but someone 'flipping' Legos doing that much? Still seems like a stretch requiring huge warehouse space and multiple people shipping, buying, accounting, etc. That is 192 hundred dollar Lego sets sold/shipped a day and there would need to be corresponding purchases to replace the inventory sold.

While it is certainly possible it would be difficult to sustain purchases that large at 40% off. But if you can't get 40% off retail sales price then you will have to purchase more than $5 million and sell more than $7 million to make $1 million in profit.

Anyway I look at it makes it hard to believe for me.

It is a stretch but can be done. I know a few people who are in that league.

I'm not going to give out the way it can be done but if you look at third party sellers on 3rd party selling sites. Monitor some of the larger sellers (non big box retailers). Monitor their sales and how many they sell. Then, do some research and try to figure out what the cheapest price was for those products. Then, you'll begin to see how they do it. You just have to figure out when to buy and then grow exponentially. Understanding the competitors and how they do it gives you a bit of an insight, you just need to figure out how to better them.

To make $1m, it does not take $7m in sales. Purchasing at the right time, understanding the market, know your retail prices, know when to attack when you see the right price to buy, maximizing all resources available to you, and selling at the best possible time will garner larger profits.

You just have to think of the bigger picture. If you take a look at last year even, by Christmas time, there were multiple sets which allowed for 100%+ profit. You pick the right ones and your profits shoot through the roof. You buy a couple hundred to thousand of them and you can easily earn quite a bit. You just have to have the money/space to hold out for the best prices.

Just some food for thought.

I agree with Mos Eisely. Most of my collection is polybags and promotional.[TC-14 anyone?] I like them for the price,simplicity and the promise of seasonal returns. [Good stocking stuffers!]