My One-Way Transition from Investor to Seller

[legoray01]

Sorry on the situation.

 

The key to this is investing.  Investing is a long haul event. 

 

Occasinally I find something I can turn around and make money on today but it is rare and not really my goal.  Investing is four to five years from now when I start selling. 

 

But I have sold some and that is a bear. 

 

The first thing I am starting to do is gather boxes.  I get them from work and put my new sets in boxes today before I put them away.  By preparing I get them for free today and I can find the things thatt fit the best. 

 

Investing wise I am preparing to sell today even though it will be years before I do.

 

If I sold my entire collection today I would net $600 is my guess after fees and shipping. 

 

But if I sold the sets I have sat on for years.  AT-AT, the first falcon, NASA sets, UCS Yoda, etc. I could net a lot for these only.  All of these are themes. 

 

Diversification is the other key.  Buy lots of different themes.  Feel better about some and buy a few more of those but don't be shy about buying others.  Even in the city theme there are sub themes that are worth having if bought at a discount.   (Coast Guard, Farm, Police, Fire, Airport, etc.)     

 

Anything I bought today isn't a money maker today.   

 

Also, Credit Cards and Lego investing don't go well together.  It is like buying on margin.  don't do it - I know I am tempted but I pay them off at the end of the month and I use them to get for discounts only.  Margin buying is a bad game to play. 

 

My two cents

 

(Really sorry you are now an "unplanned" seller and no longer an investor.)

[djim]

So you are telling me buying and reselling toys is pretty much the same as trading shares of Amazon or Google? I guess the brains trust was on vacation during that debate. Reselling toys carries tremendous risk that you are not exposed to when reselling shares in an S&P 500 company. I would have no problems investing my hard earned money in either Amazon or Google in my judgment proof retirement account but I would not invest a dime of that hard earned money in a reselling business - the return is simply not great enough to compensate for the risk assumed.

 

Other peoples money (especially banks) I have no problem "investing" in a resale operation. Just ask the OP if he would rather have $20k of Lego or $20k of Google shares right now.

 

at today's price for google shares vs. me getting to pick the sets i want, i'll take the legos.  for a 3-5 year investment. 

 

but really, i'm doing both.. i own lego sets and a variety of stocks, including google. you don't just diversify the sets you own, you diversify your entire investment portfolio.  

[oneknightr]

To the OP, sorry about the reason why you needed to sell your Lego.

 

I love the tips, advice, and info on this thread. I too have an issue with just buying and not selling enough. Like people have said here, selling takes time and time has a cost that a lot of people don

[brickelements]

Mostly.....

Vehicles like Garbage Truck, Flatbed Truck & Cement Truck at -50% or less.

Fire stations, Fire Planes & Fire Boats at -60% or less

A year after EOL it's hard to recover purchase price so I'm done with this theme. However I'm keeping Town Square and Coast Guard sets for the long haul.

Town Square IMO should be a staple in everyones brickfolio.  Potentially week theme of city but...it is sorta a modular, has sought after minifig vehicles and a decent number of minifigs to boot (7 exclusive to the set).  Exclusive to TRU and L@**** will help keep the value as well.

 

I only have (4) so far (all bought on 20% or greater discount) but hope to increase holdings to a dozen before retirement.

 

The Daily Deal on eBay should help with an automatic 15% DISCOUNT. Combine that with a 20% discount TRU offers on this set and that is a winner of a price, IMO.

 

The pieces included provide a great asset to those creating their own CIty MOC.

[legodelorean]

(Not sure if this is the right place for this. Apologies if it's not.)

 

 

The Investor Phase:

 

If you have savings, a decent job and a credit card that you don't need to pay off for a year, it's VERY VERY EASY to do this part.  You just check various places every day for deals and buy buy buy!!!   The lack of space in my house caused by stored Lego and my large credit card bill (0% interest until this October) are testament to this!

 

Like most BrickPickers I'm aware of, my approach was generally to buy on 30% discount or more and get at least one of each set for my personal collection and then multiples of sets I thought would do well at EOL.  Despite not really being a very organised person, I spent a fair amount of time logging all my sets and where they are stored, in anticipation for the day I start to sell them.  I have about 1000 sets, ranging from the small ones up to SSD (one of).  which isn't including minifigures and polybags.

 

 

The Turning Point:

 

I left my well-paid day job a couple of weeks ago (not by choice) and am going to try to be self-employed instead.  With no steady income and possibly needing to downsize our house, and the credit card to pay off in October, I NEED to start selling the Lego for cash and space.  If only I'd just left all the money in a savings account!  Ah well!

 

 

The Seller Phase:

 

About 3 weeks ago, I sold my first set (on eBay).  Since then, I've sold another 11 on eBay (10 posted and 1 sold this morning).  Total money back in my pocket is about

[legoman12323123]

So you are telling me buying and reselling toys is pretty much the same as trading shares of Amazon or Google? I guess the brains trust was on vacation during that debate. Reselling toys carries tremendous risk that you are not exposed to when reselling shares in an S&P 500 company. I would have no problems investing my hard earned money in either Amazon or Google in my judgment proof retirement account but I would not invest a dime of that hard earned money in a reselling business - the return is simply not great enough to compensate for the risk assumed.

 

Other peoples money (especially banks) I have no problem "investing" in a resale operation. Just ask the OP if he would rather have $20k of Lego or $20k of Google shares right now.

 what are you doing on this site than isn't buying lego reselling for more money when it retires essentially a resell business? You just said yo would not spend a dime in reselling business lol? 

[djim]

this isn't really reselling either.  my previous business was a reseller business selling software licenses.  we hit #77 on the Inc 5000 list last year, so in my mind there is no question that "reselling" can be profitable: I proved it.  That said, I don't look at Lego investing as a reselling business.  You are in the end, selling collectables after they retire.  It's a different game.  Similar in some ways, but not the same.  

 

Also, never ever buy something with credit cards that you can't pay off immediately with cash.  That's just bad investing all around...never bet what you don't have. 

[Darth_Raichu]

Gondorian, good luck with your new venture.

this isn't really reselling either.  my previous business was a reseller business selling software licenses.  we hit #77 on the Inc 5000 list last year, so in my mind there is no question that "reselling" can be profitable: I proved it.  That said, I don't look at Lego investing as a reselling business.  You are in the end, selling collectables after they retire.  It's a different game.  Similar in some ways, but not the same.  

 

Also, never ever buy something with credit cards that you can't pay off immediately with cash.  That's just bad investing all around...never bet what you don't have. 

Care to elaborate ? I have watched too many Comic Book Men episodes to see any difference between "reselling" and "selling collectibles after they retire". Also, what would you call the later ?

[No More Monkeys]

Gondorian, good luck with your new venture.

Care to elaborate ? I have watched too many Comic Book Men episodes to see any difference between "reselling" and "selling collectibles after they retire". Also, what would you call the later ?

I think reselling in general sense does not imply the component of "wait for manufacturer to stop producing what you have". Plain reselling is "buy something at a biggest discount possible, sell it alongside the manufacturer, even better if manufacturer gets sold out(but will produce more) and item is in demand" . in our terms, general reselling is "flipping".

 

Once "wait for retirement" component is involved, it becomes more specialized reselling.

[djim]

I think reselling in general sense does not imply the component of "wait for manufacturer to produce what you have". Plain reselling is "buy something at a biggest discount possible, sell it alongside the manufacturer, even better if manufacturer gets sold out(but will produce more) and item is in demand" . in our terms, general reselling is "flipping".

 

Once "wait for retirement" component is involved, it becomes more specialized reselling.

 

pretty much this.  what we are doing is almost like what a pawnbroker does when the customer forgoes the loan and just sells the item.  the pawnbroker is speculating what it can get on the market.

 

typically, reselling is buy at a fixed discount and sell at a fixed msrp along with everyone else, like no more monkeys is saying.  

 

edit: arbitrage was the wrong term to use here. 

[Darth_Raichu]

I think reselling in general sense does not imply the component of "wait for manufacturer to produce what you have". Plain reselling is "buy something at a biggest discount possible, sell it alongside the manufacturer, even better if manufacturer gets sold out(but will produce more) and item is in demand" . in our terms, general reselling is "flipping".   Once "wait for retirement" component is involved, it becomes more specialized reselling.

To me that sounded like splitting hair as in both cases you would need to setup your selling venue(s) and shipping the items. As Gondorian found out, those 2 components were more important than the "wait for retire" part, as in had he waited he would still need to do those 2 things. Plus by that definiton, any investor buying a DS will never be able to sell it until (insert any idiom for a very long time here).

[No More Monkeys]

pretty much this.  what we are doing is almost like what a pawnbroker does when the customer forgoes the loan and just sells the item.  at its essence, we are practicing arbitrage.

 

Conditions for arbitrage[edit]

Arbitrage is possible when one of three conditions is met:

1. The same asset does not trade at the same price on all markets ("the law of one price").
2. Two assets with identical cash flows do not trade at the same price.
3. An asset with a known price in the future does not today trade at its future price discounted at the risk-free interest rate (or, the asset has significant costs of storage; as such, for example, this condition holds for grain but not for securities).

 

http://en.wikipedia.org/wiki/Arbitrage

But at the same time, time-extended arbitrage is still just a specialized flavor of reselling.

 

Wikipedia: A reseller is a company or individual (merchant) that purchases goods or services with the intention of reselling them rather than consuming or using them. This is usually done for profit (but could be resold at a loss).

[djim]

yea it might be splitting hairs.  i was initially responding to someone saying "reselling isn't good business, let the banks take the risk", which is just silly.  but i was also trying to say that this game isn't the same as the "reselling" i am used to.  like you said, the speculation aspect adds an entirely different element.  

 

others may be but i am not naive to the effort involved with selling, so that's not generally a concern of mine (already built in and  1 reason why i am focusing on larger sets).

 

sorry for the confusion. 

[Gondorian]

Whilst we can't agree on whether it's investing or not, it seems like we do agree that all Lego "investing" requires reselling.  And it's the reselling part that's a whole lot of hassle and maybe makes the investing side not worth it.

 

Update from me: I posted another 2 sets today (Royal Mail), and also bought a printer so I can start using MyHermes instead of RoyalMail for bigger items.

[Gondorian]

I figured I'd post an update for those interested in my trials and tribulations ...

 

Total sets sold now: 17

 

Purchase price:

[Ciglione]

Not to bad. Well done.

[abri123]

I figured I'd post an update for those interested in my trials and tribulations ...

 

Total sets sold now: 17

 

Purchase price:

[Alcarin]

I figured I'd post an update for those interested in my trials and tribulations ...

 

Total sets sold now: 17

 

Purchase price:

[djim]

I figured I'd post an update for those interested in my trials and tribulations ...

 

Total sets sold now: 17

 

Purchase price:

[Gondorian]

Consider also using Collectplus as an alternative to myHermes. Although myhermes are a bit cheaper, I've stopped using them as too many problems occurred. Alternatively UPS drop off via a broker site, if you have a nearby drop-off location can be quite cheap.

 

Lego for sale/swap/wanted UK on facebook has over 1500 members - I've just found it in the last few days, but may be an alternative selling outlet for you?

 

Thanks for the tips. I've applied to join that FB group and will look into collectplus.

[Legodog]

This is an excellent thread. Way too many people concentrate on buying and don't ever try out selling before they are just too deep. I am one of these people and I have long since learned my lesson (I think). For the first year and a half all I did was buy. I bought up over 1000 sets during this time. I would say that I was addicted (still am).

 

The point came where because of money and space it was time to offload some of my sets. In order to buy more I would need to start selling first. So in January of this year I started selling. This was an eye opener. I know everyone says that it takes time to list, sell, package, ship, etc but you really don't understand until you do it yourself. It is very time consuming. You also have to expect there will be problems. Lost packages, buyer returns, etc. This all eats in to your profits and time. I know a lot of people say large sets are the way to go and I agree to a point. Just know that those sharks on eBay/Amazon looking for sets to scam people on aren't looking for small inexpensive sets. I've got burned a few times already and it is always on large sets. A mint condition Imperial Shuttle returned banged up and opened, a Robie House returned destroyed after FedEx left the package in the rain, a AS returned because the buyer "bought it for someone who didn't like LEGO", a Robie House and AS on the way back now for a mystery reason, 0 feedback buyers everywhere, etc. Some of these can be avoided with experience and others are just part of the selling process you have to deal with.

 

And here comes the big one everyone is warned about over and over but never really understands until they sell.... FEES. The fees are much more of an impact on your bottom line than you may think. Make sure you find a good fee calculator online and just play with it a little and enter some values in for sets you have. See what you must sell at to get a certain return on your investment. This is easy and takes just a couple minutes but it will be an eye opener for some who haven't even thought about the selling side of this yet. Make sure you add in estimated shipping costs and add a little for supplies. I know most people don't think about tape, boxes, paper, ink, etc but it adds up very quickly when you start selling at a higher volume. As an example I have spent $40 this year just on packing tape itself.

 

I made the mistake as I am sure a lot of others do of thinking if rough times come or I need the money to reinvest I will just sell a bunch of sets and be fine. The truth is it takes a lot of time for things to sell. Like others have posted its not like selling stock. It will take months before you can sell a large inventory of sets. If you need your money fast you will be basically giving your sets away to sell them fast. Many times I have been the lowest price and still had to wait weeks for the item to sell. 

 

To sum this all up I am still learning but I feel much more confident that I have gone through the selling process and know what is involved. It will actually change your investing and buying decisions. It has drastically changed mine and now I am making more money and spending less time because of it. Since I started selling in January I have sold almost 600 sets totaling just over $37,000. This has allowed me to grow my investment to over 2100 sets and make much better investment decisions. If anyone wants the exact numbers on profits, fees, etc on those 600 sales you can PM me.

 

Buying is only half of the investment process. Make sure you try the other half before you get in too deep. 

[brickolodon]

This is an excellent thread. Way too many people concentrate on buying and don't ever try out selling before they are just too deep. I am one of these people and I have long since learned my lesson (I think). For the first year and a half all I did was buy. I bought up over 1000 sets during this time. I would say that I was addicted (still am).

The point came where because of money and space it was time to offload some of my sets. In order to buy more I would need to start selling first. So in January of this year I started selling. This was an eye opener. I know everyone says that it takes time to list, sell, package, ship, etc but you really don't understand until you do it yourself. It is very time consuming. You also have to expect there will be problems. Lost packages, buyer returns, etc. This all eats in to your profits and time. I know a lot of people say large sets are the way to go and I agree to a point. Just know that those sharks on eBay/Amazon looking for sets to scam people on aren't looking for small inexpensive sets. I've got burned a few times already and it is always on large sets. A mint condition Imperial Shuttle returned banged up and opened, a Robie House returned destroyed after FedEx left the package in the rain, a AS returned because the buyer "bought it for someone who didn't like LEGO", a Robie House and AS on the way back now for a mystery reason, 0 feedback buyers everywhere, etc. Some of these can be avoided with experience and others are just part of the selling process you have to deal with.

And here comes the big one everyone is warned about over and over but never really understands until they sell.... FEES. The fees are much more of an impact on your bottom line than you may think. Make sure you find a good fee calculator online and just play with it a little and enter some values in for sets you have. See what you must sell at to get a certain return on your investment. This is easy and takes just a couple minutes but it will be an eye opener for some who haven't even thought about the selling side of this yet. Make sure you add in estimated shipping costs and add a little for supplies. I know most people don't think about tape, boxes, paper, ink, etc but it adds up very quickly when you start selling at a higher volume. As an example I have spent $40 this year just on packing tape itself.

I made the mistake as I am sure a lot of others do of thinking if rough times come or I need the money to reinvest I will just sell a bunch of sets and be fine. The truth is it takes a lot of time for things to sell. Like others have posted its not like selling stock. It will take months before you can sell a large inventory of sets. If you need your money fast you will be basically giving your sets away to sell them fast. Many times I have been the lowest price and still had to wait weeks for the item to sell.

To sum this all up I am still learning but I feel much more confident that I have gone through the selling process and know what is involved. It will actually change your investing and buying decisions. It has drastically changed mine and now I am making more money and spending less time because of it. Since I started selling in January I have sold almost 600 sets totaling just over $37,000. This has allowed me to grow my investment to over 2100 sets and make much better investment decisions. If anyone wants the exact numbers on profits, fees, etc on those 600 sales you can PM me.

Buying is only half of the investment process. Make sure you try the other half before you get in too deep.

Thats totally my story too...thanks for great post.

[Darth_Raichu]

Buying is easy, anyone with money can do it. Selling, especially for profit, is where your resolve is tested and your body abused ;)

[justafrog]

Legodog, really excellent points!

 

No one is good at everything, and it's far better to know if you loathe or suck at selling (and if you can or can't get better) early on than to keep buying and have a huge number of sets to unload when you will hate every moment or just be bad at it.

[No More Monkeys]

that's in a way why I decided to mix and match longer term holding with flipping, though i am conservative with flipping - my goal was to remain at above 50% ROI after fees when flipping (well, with occasional 30% on expensive stuff). That way i develop the feedbacks and metrics, while being better aware of the selling side.