Who doesn’t enjoy making a bit of extra money?  I know I get excited about making a little extra cash and I have several ‘side hustles’ that I enjoy.  One of the things that I do to make a bit of money is buying and selling things on Craigslist and online auctions.  Shows like “Barter Kings” and “Storage Wars” have capitalized on the interest and curiosity in making money in this way, even if the shows are a bit dramatized.

Case study: How to make money online
Let’s take a look at a good score I made last year.  I won an online auction for two lots of tools from the Fort Worth Police Department.  The tools were collected from a variety of seized and impounded vehicles.  An auction company ran the auction online for FWPD.  Bidders were given one or two photos of a pile of stuff.  There were auction lots that consisted of car stereos, computers, speaker boxes, wheels, etc.

I saw one lot that had 4 or 5 laptops, a few digital cameras and a stack of car stereos with some other misc. electronics. Those were the big ticket auction lots going for $500+ dollars.  All of those electronics carried a lot of risk.  There might be one or two good items in the lot and you might break even, but there was a ton of risk and a ton of people bidding on the electronic lots.

I noticed that very few people were bidding on the lots that consisted of small hand tools.  I found two lots of items that were still under $50 and had TONS of hand tools and other small items.  There is not much you can do to mess up a hammer or a screwdriver so I decided to give it a whirl.  The prices rose as the auction came to a close and in total I paid approximately $175 for the two lots that I won.  If you decide to look into online auctions, remember there is a 10-15% fee that goes to the auction company.  In my case it wound up being about $14.

Another consideration is time.  It took a bit of time and effort to pick up my items.  The company I used required a cash or cashier’s check payment in person at their office in Fort Worth.  I planned out my trip on a day when I had business on that side of town so I wouldn’t be wasting fuel.  It took about 20 minutes to get the paperwork done at the auction office.  I then drove to the FWPD impound lot to pick up my items.  They move slow as molasses there and it took about 2 hours to get into the area where my items were locked up.

That day I happened to have a good man with me who was patient enough to hang out with me and give me a hand loading the items.  It was a good thing!  There were a LOT of tools.  In case you didn’t know, tools are heavy! The tools completely filled the back of my F-150.  I knew I had done well, but a good buy isn’t a good score until it has made you some money.

Pricing the tools was educational.  I put up some tables in our garage and started sorting through all the work bags and tool boxes.  There were literally hundreds of tools.  There was some junk that got tossed, basic items that got piled together and some pretty good high-end hand tools in the mix.  Also in the auction lot was a gas chainsaw that was like new, several electric hand tools and a few other goodies.  Thanks to Google I was able to price some of the items I was unfamiliar with, they were mostly plumbing tools.

To sell the tools I set up at a parking lot sale in a nearby community.  My parents, who have been flipping stuff for years, were kind enough to let me have half of their space and wouldn’t let me pay them anything for it.  Let me tell you, selling tools at a parking lot sale is exciting!  I was glad to have my parents there to help keep an eye on things, because it got crazy at times.

It was honestly the most fun I have ever had at a garage sale type of event.  A good number of the tools were individually priced, but I had bags of screwdrivers, pliers and sockets for $1 each, 50 cents each and 25 cents each.  People really enjoyed digging through the bags and pulling out a hand full of items to buy.  There were several full sets of socket wrenches, hammers galore, and a ton of specialty tools.  At the end of the day I had made 3x the money I had invested.

Looking at the math, I had about 25 hours into the project, which works out to about $12 an hour.  Plus I still have 3 large tubs of tools to sell at a future event, including some high-end tools that will probably need to be sold individually on Craigslist.  There is at least another $400 sitting in the tubs.  I also kept some of the tools.  There were two Ryobi cordless drills that were in the same system of tools that I use.  Both drills had good batteries on them which was a big score.  There was also a nice Ryobi belt sander that I added to my collection.  I was also able to give away some tools and other items to friends and family members who I knew could use them.  It was a big score that is still giving!

Case study: How to lose money on Craigslist
I have had a lot of success buying and selling things on Craigslist.  I will write another article with a few of my tips for CL at another time.  To date, the largest purchase I have made on CL is a travel trailer that my family uses.  I have bought a utility trailer, a high-end lens for my camera and several other high value items on CL.  I have also sold a number of high priced items on CL.  Last year I had my worst flip on CL.  Looking back, I should have trusted my gut and walked away from the deal.

I was helping a woman at church clear out some items from her home.  She had a 16′ open trailer that needed to be sold.  It was in pretty rough shape and was probably only worth $600-700.  She wanted to try and get $1000 out of it.  The highest cash offer I had received for the trailer was $650, so I decided to try and barter some items that I could flip for it.

Let me tell you, when you put a big item in the barter section of Craigslist prepare yourself for some entertainment.  Trailers are a hot item so there were tons of offers.  I received offers that were complete rubbish and others that were interesting.  Some of the offers were things I could probably flip but were well outside of my area of knowledge.

I finally received what appeared to be a solid offer.  A man that lived about an hour away offered a John Deere lawn tractor and a pair of trailer axles.  The tractor was a John Deere 317, a popular small lawn tractor that has hydraulic hookups on the front and back for tools like a plow, blade or snow blower.  I did some quick research and found that I could give my friend the $1,000 for her trailer and still make about $200 on the deal.

I drove out and did the deal.  (My future post on CL will talk about safety when making deals.)  I had an uneasy feeling about the tractor when I got on it, because it just felt like it was ready to break down.  I should have gone with that gut feeling.  We shook on the deal and he helped me load the tractor, accessories and the axles in the back of my truck.  It was a full load.

I got the tractor home and drove it around a bit on our property.  The second time I had it out the engine started making a loud knocking sound and poof…it was done for.  That’s not a good feeling.  I had already paid my friend the $1,000 she wanted for the trailer because this risk was mine to take not hers.  Now I had a very expensive yard decoration.  Lucky for me the 317 is popular enough that I was still able to get $450 out of it even with a blown motor.  The axles are still in my garage and someone will eventually buy them for $300.  (The pair I have cost about $500 new.)  So I will eat about $250 on the deal.

Did the man who sold me the tractor know it was going bad?  No one can say.  All the items I took on that flip were outside of my area of knowledge.  My quick research found that the tractor had a value of $1,000 and the axles were worth $300.  Everything seemed to be running and working fine, but things can change quickly.  I have no hard feelings and in the long run I have made quite a bit more money than I have lost.

In closing: Wise lessons from my parents and other successful sellers
My parents are master flippers.  They buy small items for a steal and sell them at a premium price.  Most times they look for a 5-10x margin on items they buy.  When you are buying and selling with a 10x margin, you’re not buying big things.  They have been doing this long enough and have the knowledge to pick up an item for 50 cents or a $1 at a yard sale and then sell it for 10x that in their various sales.  Small sales at a reasonable volume can add up quickly.

When my wife and I were selling items at a local antique mall, I learned the same lesson from a vendor at that site.  This vendor was also an employee of the mall and made some of the highest revenues of any vendor in the mall.  One day I was helping her with a computer issue at the mall and she had me log into her sales report for the work I was doing.

As I worked, she told me to look at her sales data and taught me a valuable lesson.  It was mid-month and she had already sold thousands of dollars of items from her multiple booths in the mall.  It was a LONG list of items in the $2 to $5 price range that made up the bulk of her sales that month.  They weren’t big scores.  They were little things that she got for free or picked up for 10 or 25 cents.  Small steps to big success.

What about you?  Do you buy and sell things on Craigslist or through other avenues?  I would be curious to hear your thoughts and experiences.  As always, I REALLY appreciate you sharing this post with friends via email, Facebook or Twitter using the buttons below.