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  • Lessons Learned When Going From LEGO Buying to LEGO Selling


    After reading an earlier thread, I want to make a thread chronicling my own transition from LEGO “investor” to LEGO “seller.”  I have received a ton of great advice on this site and have learned a few things along the way.  I started the buying side of this in November 2012 and have completed my first several sales (November 2014).  I want to point out some of the things that I learned here and did right and some things I didn't know and did wrong.  Some of this information may be very basic for many of the advanced LEGO investors on the site, but some of the information might be able to help some of the novices out there nonetheless.

    BACKGROUND:

    A lot of the posts on the Brickpicker site, particularly those from the seller's side, seem to be from larger scale reseller types who have really been successful in creating a small business of LEGO buying and reselling.  While those posts are often helpful, I first off want to say, that's not me and it is not my goal.  I have a secure full-time middle class job which I enjoy.  This is more of a hobby in which I can make a little money from, rather than a true investment that I'm going to send my kids to college with or pay for a retirement  home when I get older.  Those life priorities I have paid for by conventional means.  My goal is to pay for LEGO sets that I buy for myself and my future kids with profits that I earn from selling other sets...and maybe earn a little extra cash on the side.  The time I spend doing this is recreational to me and I won't be breaking down my hourly wage from how much I make from it.  That being said, this has been much more fun than reading my 401k statements every quarter and I think I have the potential to do much better job if it was a competition.  My ROI(Return on Investment) goal is to (on average) double my money on the sets I sell.  I knew I would not spend more than $10k on this investment between the sets I want to keep and the sets I want to sell.  The cash I used was sitting in the bank and was not my emergency savings.  I only say that because I see people going into debt to buy LEGO sets on the site and that is a horrible idea.  I also am not a "flipper," nor a "parter outer."  My strategy from the get go was to hold and sell after EOL(End Of Line).

    BUYING LESSON #1 (WHAT TO BUY):  CHOOSE WISELY...DO NOT BUY TWO OF THE SAME THING JUST BECAUSE YOU WANT ONE TO BUILD AND ONE TO RESELL.  THE SET MIGHT BE A BAD INVESTMENT.

    As a child in the late 80's through the late 90's I played mostly with City Sets, though also played with a few Space, Kingdoms, Pirates, Western sets.  I don't recall any licensed sets back then.  Like Will Ferrell in The LEGO Movie, I had a whole city on a table (as a kid). After coming out of the "dark ages," one of the things that concerned me was that sets I would want to build later on would be EOL and would cost me a fortune.  So many of my initial sets purchased were bought so I did not have to pay a ransom for them later on.  Many of sets I bought two of...one for me and one for an “investment.”  I'm pretty sure it has been suggested on here that you can't go wrong on buying sets you like and want to play with.  Well if you are like me and like playing with City and other “generic” sets, that's a bad idea.  I'm going to probably hit my goal on many of these City sets I have, but it will take a while and the ROI will be weak.  I wouldn't say I was addicted to buying (liked the linked thread above), but in the beginning, I certainly did go on a buying frenzy on the outset.  I would have been better off separating “play” set buys from “investment” set buys.  Sometimes they are the same, but many times they are not.

    BUYING LESSON #2 (EOL): DON'T BUY NEW RELEASES AND TRY TO BUY AS CLOSE TO EOL AS POSSIBLE.

    My first major buys: An Ultimate Collector's Series Imperial Shuttle and a 10188 Death Star.  The Imperial Shuttle went EOL and has doubled in price and the Death Star wouldn't even make up the selling fees if I sold it today.  EOL, or in other words...when a set retires, means everything to my investing strategy.  Buying towards the end of EOL is critical.  In the beginning I bought several newly released sets and it's going to take me a long time to make money on them compared to the Imperial Shuttle which I bought right before EOL.  Obviously, buying towards the end of EOL is a crap shoot, but I could have done more research and at least not bought new releases.  In the future I will probably make many of my buys after the products have been out a couple of years.  In some cases this may be too late or too early, but it should be better than buying new releases or stuff after one year.

    BUYING LESSON #3 (SPACE):  SPACE COSTS MONEY, LACK OF SPACE CAN LIMIT SIZE OF INVESTMENT INVENTORY, FORCING TOUGH CHOICES.

    I have a decent sized home and had a bedroom mostly used for storage.  The closest was the kind with the two sliding doors, maybe 4 feet deep by 8 feet wide.  I filled it with about $8k in LEGO sets in 6 months.  Thankfully it is in a cool dark area and had shelving.  If I was paying for space, that would kill any profit I would be making as a small investor.  My space was available and free and I think that is what keeps this type of “investment” profitable.  If everyone had an empty closet lying around, there would be so much more competition.  That being said, when my closet started getting full, I slowed my buying down and really started getting more focused on buying the sets I could make the most money off of.  The lack of space made me a smarter buyer.  My Brickfolio is at about $9K in purchases and I didn't feel the need to go all the way to my $10K initial goal.

    BUYING LESSON #4 (SET SIZE):  MEDIUM TO LARGE SIZED SETS ARE THE BEST FOR MY STRATEGY.

    For various reasons, I bought a lot of small sets ($20-$40).  As I progressed into the selling phase, I see why this is an issue.  They don't make as much money and take more of your time.  That being said, I'm also not a fan of the really big sets.  They make me nervous as a small time seller.  If I put all my money in a $400 SSD and get robbed by someone on Ebay, I'm done.  I also don't think sets with that much value will increase as much percentage wise as a $100 set.  Also with a large set you take up a lot of space and capital with fewer sets (see my Death star).  The amount of people able to pay $300 for a set, vs $1200, is huge in my honest opinion.  My goal in the future is to focus on investment sets in the initial $80-$200 range.  That maximizes my time, storage space, and if I get burned, the sting won't be so bad.

    BUYING LESSON #5 (SALES VS MSRP):  FOCUS ON QUALITY SETS, NOT ITEMS ON SALE.

    So I always love looking at all the sales info on here and have geared many of my buys to LEGO sets that are on sale.  My particular area is a densely populated area of Southern California, so my best sale items are online (no clearance racks here).  Most of my purchases have been discounted buys from Amazon.  These sales have slowed over the last year, but in the beginning they were plentiful.  But this led more to my buying even more City sets or other sets that are not going to have a high ROI.  I waited a long time for the Haunted House to have some kind of discount.  I got one for $10 under MSRP on Amazon at one point and decided to wait for a better sale to get more.  Well it's EOL and I only have one.  Huge mistake.  I should have ponied up MSRP for a couple more.  I would have been better off on focusing on what sets were going to have a high ROI, not what sets I could get the best discount on.

    BUYING LESSON #6 (WHAT TO BUY):  BUY COOL SETS THAT ARE UNIQUE.

    Do not buy sets that will be re-released (most City).  The safe bets are Modulars, licensed sets, UCS sets, Creator Houses, Trains and adult themed stuff.  Try and go for sets that are neat and more unique. There is money to be made in every theme, but if you are trying to maximize your profits and time, do your research.

    THE TRANSITION:

    So over the last year I have slowed down on the buying.  I figured I would start the selling phase next Christmas, but thanks to the new Jurassic Park Movie, I had to unload my Dino Theme this year.  I had 10 Dino sets that needed to be sold before they are re-released.  I am lucky in that in this particular situation of re-releases that I had a large advanced notice the Jurassic Park theme was coming out with the movie next year and the last Dino sets have been EOL over a year.

    SELLING LESSON #1 (POSTING FOR SALE): PAY CLOSE ATTENTION WHEN POSTING ITEMS ON EBAY...USE GOOD PHOTOS...MAKE THE POSTING CLEAN.

    Your sets are not unique snowflakes.  There are multiples of sets for sale of basically anything that has been released in the last few years. I use eBay's Buy It Now and would consider myself a novice in using it.  I would rather avoid the risk of an auction at this point and can sit on some sets for a while.  While there are other ways to sell, this seems the most logical for me as a small time seller.  I have never sold anything on eBay before, though I have been buying for years.  There have been numerous threads on the fees, so I won't go into that.  I don't post until I can make my net profit goal on sets and I figure fees into that.  I would not describe eBay as hard to use, but it can be annoying.  If you are posting numerous sets, it seems the settings reset to random things each time you try to make a new post (auction or BIN, shipping, payment types, posting time frames, etc).  I had to be very careful and edit some things later on.  One of my other part-time hobbies is photography.  For less than five bucks I set up a light box for product photography.  I already had the flashes and other stuff. I you don't have photo equipment you can still buy some cheap white posters and do this with a small camera.  I see a lot of crummy cell phone pics on eBay and as a buyer, I would shy away from those.  I posted over a few days before Black Friday.  Next year I will post earlier for the holidays.  I am not using a script and have a very short listing, but in the future I might move to a script.  However, I see a lot of messy, cluttered, and ugly listings out there.  Some of the posts dealing with eBay have put a healthy fear into me, so I do not accept returns and do not ship internationally.

    SELLING LESSON #2 (GETTING PAID): UPGRADE TO A PAYPAL BUSINESS ACCOUNT BEFORE YOU START...USE THE “IMMEDITATE PAYMENT REQUIRED” FEATURE.

    Now when people say moving from investor to seller is not fun, they forget about the best part...getting paid.  Watching the money drop into your Paypal account...and tripling your money after a year and a half, is pretty awesome.  But there are issues.  Deciding on what to price a set takes some time and research.  I have my collection in my Brickfolio and that helps, but every set is in different condition so all those variables have to be accounted for.  Between used sets, parted out sets and people posting sets for ridiculous amounts way above the norm, I decided to price my sets towards mid range to make it easier. My first sale was a Buy It Now and the seller never paid.  No email saying my kid did it, nothing.  Not a major issue except it takes my product off sale for almost a week.  Another listing a buyer took a couple of days to pay.  During my research I discovered you can set your items to “Immediate Payment Required” for Buy It Now  sales.  I never saw this option when setting up my eBay listings.  Further research showed it was under the advanced item listing AND I needed to have an active PayPal Business account for it to even be offered.  I will be using “Immediate Payment Required” from now on. My next problem was PayPal.  I have used it for a while to buy stuff, but never received money from it.  After my first sale, I got an email from PayPal saying they would not accept the credit card to a “personal account,”  which is what I had.  Apparently this is not true anymore, but PayPal still sends out the email.  I tried to research the difference between PayPal personal and business they don't say much and the fees are supposed to be the same.  I eventually upgraded to a business account on PayPal.  Also note there is a three week delay when you actually get the money.

    SELLING LESSON #3 (SHIPPING AND HANDELING): KEEP THE PACKING MATERIALS YOU GET...HAVE THE MATERIALS READY TO GO BEFORE YOU POST...GET A SCALE.

    This is where things get a little more challenging for me and makes me nervous.  I chose to charge separate for S&H on eBay.  I chose the “standard shipping” option and made up my own fixed rate.  I pretty much guessed at the rates for my first group of sales.  Most of the guesses were close, except for the boxes.  KEEP YOUR BOXES.  I can not stress this enough.  I had boxes saved, but not ones for the larger sets.  So as soon as I made my first sale I wandered on over to Office Max for shipping supplies.  They had four box sizes. That was it.  Target was worse. I had to go to a UPS store for large shipping boxes and I paid $5 for each of the boxes for my larger sets.  Way too much.  Had I saved my boxes I would be $10 richer now.  I have also located a shipping store in my area now that will be better in price and selection for future sales.  I should have had the packing materials ready to go before I posted the items.  I bought a box re-sizer mention on these forums for my next batch to cut down on size and hopefully cost.  Additionally, I didn't have a postal scale, so I used the bathroom scale and rounded up the weight on the box to be sure it was OK.  I would rather do that then stand in line at the post office, but have since ordered a postal scale for less than $40.  I used the eBay USPS shipping function to make, pay for, and print shipping labels.  I liked this feature.  Still being scared of getting burned, I bought insurance and signature confirmation and then took photos of the items in the packing material.  I used mostly bubble wrap bought on sale to package my sales.

    CONCLUSION:

    In the end with my first batch of sales and after expenses, I more than doubled my investment money (On the Dino theme).  So I'm on track.  Had I done some of these things above, I could have done much better, but I consider this a success and this didn't feel like real or hard work.  Hopefully, some of you learn from my mistakes and maybe some of the more seasoned LEGO investor/resellers have some advice to offer on things I noted above.  I would consider myself still novice and have a lot to learn.  I realize everyone might do things a little differently and I am certainly open to suggestions.  Good luck with your LEGO investments.

    Opinion Article This article was built upon the experiences of steelmelt. This does not mean that all new, novice or even experienced LEGO investors should follow the practices talked about here. You may agree with some and disagree with others. As an example, personally I don't wait for sets to be almost EOL before buying. I don't want be surprised if some set has a short run and doesn't really show the signs. Then you are sitting there and telling yourself "I knew I should have grabbed that set earlier" :) That is just me, but others do like to hold onto their money as long as possible and I totally understand that.

    It will be interesting in hearing some of the feedback from both novice and experienced investors.

    -Jeff

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    Thanks for the article. Personally, I think you shouldn't focus too much on that target of doubling the sets value. For some sets that will take eternity, and that means a very low annual ROI. With time I have learned to sell a part of my stock labeled 'dead money'. Some of my city, Star Wars and Mindstorms sets for example are waiting to be recycled into more promising sets. Maybe this will also come to you over the years. In my experience, some sets are just not worth the time and space and are ripe for a firesale. That's what porfolio optimization and diversification means to me. Good work on the content. Thanks again.

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    Great article. I am new to Lego investing too but plan a similar small scale recreational operation. My own investor principles include: 1. Purchasing sets which are > 18 months since launch; hence, more likely to be EOL (never an exact science!) 2. Buying in Sales wherever possible. You instantly make money taking into according the current 'non-sale' market value 3. Focusing on sets that I am familiar with. Personally I find it helpful to focus on specific sets where I am able to 'deepen' my knowledge. It also allows you to become better are forecasting ROI 4. I prefer the 'buy and hold' strategy - much like stocks. When I buy a set in typically thinking about returns over 4-6 years. (Obviously you need to space!) These are just to get me started. No doubt my approach will evolve as I get some home runs & near misses.

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    I would also recommend buy a label printer for your postage, best purchase I have made. When it comes to materials, I have been getting great deals off of ebay for padded envelopes.

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    Very good article. It echoes many of the things I've personally gone through as a small-time investor. In my first year-and-a-half, I focused on buying small sets, and mostly those that I could find on the clearance end-caps at different Targets in my area. Looking back, I suppose there is a reason why there were 50+ Star Wars Planet Series 1 sets. Now I'm slowly transitioning my investments to medium scale sets in the $60+ range, unless they are a no-brainer winning set. I see the wisdom in the advise that some members told me... 1 listing for $150 is easier and much more worthwhile than 15 sets for $15, even if you do get more in the end. Simply put, there isn't the time to run a small business that way. There can even becomes a point in time where you are working for less than or around minimum-wage. Also, you need to learn that the resources and financial means that some members have may not be realistic for you. Pace yourself, and try to sell before you go too far. Lego investing is a cross country race, not a sprint.

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    The only thing I'd like to add is that there are exceptions to when you shouldn't just focus on the sets going EOL. If you were to have a goal of buying 50-100 of one particular UCS set you need to start early. I personally don't own any Death Stars and it looks like it will go EOL in 2016. Even if you had the cash to pick up 50 of them now, it would still be a daunting task. I plan on picking up at least two Tumblers each month but I'm also going to make sure I have enough powder left to pick up some exclusives that should be retired by this time next year.

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    Great article. I am new to all of this and have gone on the "buying frenzy". I have only bought kits I would like to build and have bought 3 of each on all my buy and hold sets. 1 for me and 2 to sell. However, I am not keeping one of all the sets I have bought. R2-D2 being one of those examples. Since I am starting out I have also picked up some sets specifically to flip. The Tumbler has been sold out and I have 2, one of which I have already turned. Trying to move the 2nd. I have also flipped some Research Institute kits and one Advent Calendar. I haven't made a ton but it has got my feet wet and paid for our own Star Wars Advent Calendar. I appreciate your comments on the shipping side since that is the place where I have the most anxiety. I have moved all my flip sets locally on the classifieds. Also, space has quickly run out in my house! ha ha...

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    Thank you for your article. Could someone please explain how can be anybody robbed by a buyer on Ebay "If I put all my money in a $400 SSD and get robbed by someone on Ebay, I'm done." ? Do you have any recommendations how to avoid this situation? Thanks.

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    I too am using a similar strategy for similar reasons. I don't want a full time job flipping $30 sets into $60 ones. I want to make my money by buying medium to large sets and holding them for as long as necessary. I have the time and the cash to do this, and the larger sets tend to take up less space per $ invested than the smaller ones. My goal is to have 3-5 units of specific, high quality sets that I wouldn't mind opening and building. My current minimum is $100 retail - the Mini Cooper is my cheapest set. I do try to get deals on these items, so I might spend less than $100 for that item if I can. I'd love to see more articles and forum posts about this type of investing, as the small item flipper and the larger commercial guys (50 R2D2s? Wow!) are already fully covered. I suspect that the investors following this strategy don't need to check in here twice a day to catch every possible deal and news item, so they tend to lurk more.

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    Great Article Steelmelt! If I didn't know any better, I would have thought that you were my twin when it came to all the Lego ideas you had in this writing.

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    Very good article and much appreciated. I've found that 99% of any problem transactions on Ebay are with people who have less than 20 recent feedbacks. I've often thought about restricting bidders to those having at least 10 or 20 RECENT postive feedbacks.

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    Excellent post. Minimize risk of holding unwanted stock is already a gain. Buy only the themes you like (you can still build, play and display even if it is not selling). I have seen people re-coloring the official set to sell. For example, using blue colour bricks to build the 10220 T1 instead of the original red. Everyone can do it but it seems to work as a lot just don't want the hassle.

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    I'm new to this site and found myself wondering... I see the prices for the Taj Mahal and the Effile Tower and I have to ask. Has anyone actually been getting this high of prices for these items?? Thanks!

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    Regarding shipping supplies. I live in an apartment complex that has a recycle dumpster and I dumpster dive for Amazon boxes (particularly the packing material) that aren't soiled with food or liquid. I was using shredded paper as filler, but it adds weight compared to the air packs. If you do have to buy boxes and other supplies, I would suggest a few things that might help save a little money: #1) Buy discounted gift cards to Staples or Office Depot from Raise.com or CardCash.com; #2) Start your "shopping trip" from Ebates.com. #3) Buy online (their online price can be several dollars cheaper than their B&M price) and look for some bundle options. Whereas at Office Depot I could get "deals" of 2 boxes for $3, I could get a bundle of 25 for something more like $15. For example, to ship some Tumblers, I got a bundle of 10 24x20x6 boxes for $14 and these boxes will end up working for some of the larger modular City Creator sets, too. At $1.40/box this is easier to digest than the $5/box the author had to deal with. It again leads to space issues, as I have stacks of supplies waiting for a sale.

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    Lots of good lessons in this article but I'll add a few more. 1) Don't collect used sets. Generally they take a ton of your time for much less return. If I added up all the time I spent taking sets apart, washing, drying, inventorying, Bricklinking spares, etc. my payment to myself would be very low. 2) Do save the material from every shipped item to your house for future LEGO orders but also check out freecycle and maybe even Craigslist for free shipping materials. 3) Be very careful how much you sell in a given year. Beyond a certain number of Paypal deposits, the taxman will cometh. Then your accountant will be taking your profits. 4) Be very honest and detailed in Ebay listings. 99% of buyers are great but you cannot avoid the other 1%. 5) I find it better to buy multiples of the same items. It takes about 3 minutes to re-list a set you already sold, much longer for a set you've never sold. 6) Do list your items through the EBay global shipping program. You get a lot more customers, there are no shipping hassles for customs, rates, tracking, etc., and there are deep pockets all over this planet. This trip will end eventually, collecting fads always do. Don't get in too deep.

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    Target stores will give you boxes for free that their merchandise arrived in, call your local store, tell them what you need and they will save them at the customer service counter for you. P.S. The word handling is not spelled correctly above...knocks your credibility down in my eyes when I read this.

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    Great great advice, ive only started, my son is 5, so keeping all i buy sealed ,for when he is 17, but have 2 of a lot for him to play with, the last week ive bought 2 grand emporium and 2 VW T1 , i think they will do well, just about to order 2 pet shop and next week 2 Parisian, do you think I am half right even.many thanks

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    If EOL is important to you than you have to be a LEGO VIP. One of the perks of being a VIP among others is to be told in advance whenever an exclusive set is to be retired - I would say that gives you 1-3 month forward notice. Of course a whole group of people get the same notice and may decide to buy like crazy at that time so I would not wait much after the notice if your intention was to buy the set anyway. I understand the idea of set in the 80-200 range but it seems there is a very strong appetite for "biggest set ever - per theme" Think Taj Mahal, Millenium Falcon and eventually 42009 after its EOL. There is also the question of rare parts - a set with many visible parts not found anywhere else will automatically increase in price much faster. City sets might not increase in value much nowadays because Lego is in a good pass - just like it was in the 80s. If Lego ever go back to the stuff it did in the late 90s, the current Lego City will be worth a mint. Too early to say if Lego design quality is cyclical (and what is its phase) but most things in life are... (BTW I am not a Lego investor. I just bought tons of set that I liked over the years with some sort of grand MOC project in my head and now that priorities have changed and space and time are at a premium I am unloading a few and keeping only the one that I truly want to build). Best with your business/hobby!

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    Thanks for sharing your experiences steelmelt! One tip I picked up recently that I haven't put into action is that I'm told you can cancel a reserve auction within 24 hours of the end without repercussion.

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    Thanks for the write up. 

    I do do have a question as I'm in the early stages (buying), when you begin to sell sets, is there a way to still have that data on brickpricker (sets sold, profits made, etc) or do most people keep separate books? I'm in the similar genre, hobby-investor.

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