An introduction to Arbitrage: Using Craigslist to make a living

On Saturday, I drove from Portland to Eugene to meet Jacob from Early Retirement Extreme. He's on a mini road trip from the Bay Area, scouting Oregon for a place to live. Along with a few other ERE readers, I joined Jacob for a meet-up. (We also go to hang out with Jacob's dog, Frank, who is so ugly he's cute.)

For those who don't recall, Jacob is a theoretical physicist who applied his analytical mind to the problem of retirement. He realized that if he saved 75% of his net income for just five years, he could actually retire at age 30. Like the couple Robert Brokamp interviewed for GRS last week, Jacob set this as a goal and made it happen.

(To learn more about Jacob and his philosophy, check out my review of his book.)

Two Paths to the Same Destination

It was fun to chat with Jacob in person. I feel like he and I are taking two paths to the same destination. We both want financial independence, but we're using different methods to achieve it. Jacob focuses on cutting costs, and I focus on making money. To be fair, he's well aware that increased income can accelerate savings, and I'm a vocal advocate of thrift. But when it comes down to it, Jacob's focus is frugality and mine is increased earning.

Naturally, Saturday's conversation centered on how Jacob and his readers keep costs low. We talked about building things, about repairing things, and about making things last. We talked about buying used things at thrift stores and off the internet. Eventually the conversation turned to the wonders of Craigslist. “You can find anything there,” Jacob said. We shared our best finds.

But it was here that the discussion took an interesting twist. “You know,” said a fellow named Ryan, “I make my living on Craigslist now.”

“What do you mean?” Jacob asked.

“Well, I buy things on Craigslist, then I sell them for a profit.”

“You sell them on Craigslist?” I asked.

“Sure,” he said.

“Craigslist arbitrage?” I asked. I hadn't heard the details, and already I was in awe. I knew I had to hear more about how Ryan makes money.

You see, one of the seeds for this very site was my own experience with arbitrage, the art of taking advantage of price anomalies to make a profit. If you pick up some old books for five bucks on eBay and then resell them on eBay for fifty, you're practicing arbitrage. Clear as mud? Let met explain how I learned about arbitrage.

Playing Games

Back in 2005, I wasted much of my time playing World of Warcraft, an online role-playing game. I liked to slay dragons and fight zombies as much as the next guy, but what I really enjoyed was shopping at the in-game auction house. When you had stuff you didn't want, you could sell it to other players through auctions. Because the game world was large enough, a stable economy developed. Certain items generally sold for certain prices.

For instance, you might be able to buy a stack of medium leather for ten silver pieces. (I can't recall exactly how much anything cost, so my examples use arbitrary numbers.) But sometimes, somebody would sell medium leather for five silver pieces. It was simple enough to buy the leather and then re-list it at the auction hall immediately, netting a profit of five silver pieces.

At the auction house…making money!

But buying and selling stacks of leather (which could be used in-game to make pouches, bags, and armor) was small potatoes. Eventually I started buying weapons and magic items. The Sword of Ultimate Slaying might normally sell for 100 gold pieces, but sometimes you might spot it selling for 50 gold. Well. I'd snap it up and then resell it for more. Even if it sold for 70 gold, I'd have made a big profit for very little effort.

I was practicing arbitrage. And soon my lowly little wizard had a fortune of hundreds of gold pieces.

“Man,” I thought. “Too bad I can't do this in real life.”

It turns out you can do this in real life. That's what Ryan was describing at Jacob's meet-up on Saturday.

Trivia: No joke — my experience with buying and selling stuff was one of the prime reasons I decided to start Get Rich Slowly. The connection isn't obvious (not even to me), but it's there.

Buy Low, Sell High

Ryan explained that he's a licensed general contractor, and has done plenty of construction work. But somewhere along the way he discovered he could make a living through buying and selling on Craigslist. I asked him to give me more details.

“You have to know how the system works,” Ryan said. “The good stuff sells instantly. Craigslist updates the listings every ten minutes. You have seconds to reply to get the good stuff, the stuff that's cheap. If a listing is more than a few minutes old, it's not a bargain.” It might be fairly priced, but it's not worth buying to resell.

“But how do you respond quickly?” I asked. “By phone?”

“I have automatic scripts set up on my computer,” he explained. “When I see a listing I want, I click a button in my browser. This automatically creates an email, and I add just a few new notes and send it. It takes very little time.” Plus, he admits that he's handy with his telephone.

“I'm not the only one doing this. If I were, it'd be easy. There are others out there snapping up the bargains too.”

“What do you buy and sell?” someone asked.

“I'll buy anything if it's a bargain. Appliances are awesome,” he told us. “A used washer or dryer is easily worth $50. Often $100. If I can get it for free — and often I can — that's pure profit.” It helps that Ryan has connections in the construction industry. When he finds something, he knows who to call.

“But it doesn't really matter,” he said. “I buy what I know and sell what I know. If you wanted to do this, that's what you'd do too.” In other words, if I wanted to do Craigslist arbitrage, I'd try to buy and sell comic books or computers.

“And you really make a living at this?” I asked.

“Yep,” he said. I suspect it doesn't hurt that he's bought into Jacob's early retirement philosophy; I'll be Ryan keeps his costs low, which would allow him to sustain his family on a lower income than he might otherwise need.

Ryan's story is great. I love finding folks who've developed creative ways to earn money, and this one was new to me. For me, the best parts of his story were the individual anecdotes he told about great deals he'd made. (Or, in one case, failed to make.) I'd actually like to hear more about how he does it. (If you want to know more, let me know; I'll bet we could get him to write a guest post!)

You can read more about Craigslist arbitrage at Dane Jensen's blog.

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LifeAndMyFinances
LifeAndMyFinances

I have entertained this idea as well, but you definitely need some spare time. I suspect there are a few things to watch for. 1) Whoever posts the item could have it in the wrong category, causing it to get fewer looks, and you can snatch it up for cheap 2) The item for sale does not have a picture to go with it. This causes less interest, which could give you a chance for a better bargain. 3) Also, if you sense urgency in the seller’s post, you could run over to their place with cash and score a… Read more »

GL
GL

Life, have you ever bought/sold anything on craigslist? As in, ever? O_o

2) Most craigslist listings don’t have pictures, especially if they’re for electronics. Everyone knows what a PS3 or an iPod looks like.

3)”you could run over to their place with cash”
How do you think people usually trade on craigslist – ship the items by snail mail and send a check? LOL… This is exactly how it works – the buyer meets the seller at their place (or at a local landmark) and pays cash.

O_o

lawyerette
lawyerette

Um, have YOU ever bought or sold anything on Craigslist, GL? Because items with a picture (even common items) get way more responses – and when I’m looking to buy, I typically don’t seek out sellers who don’t have a picture of the item. Just feels like it might be a scam.

And someone who comes over right away with cash within 20-30% of the asking price will get the item 95% of the time, because so many buyers are flakes.

GL
GL

LOL… Lawyerette, I paid for my college tuition by reselling PS3’s and Wii’s – trust me when I say I know what I’m talking about. If the item is in demand and fairly priced, people will buy it – picture or no picture. And if the seller knows that the demand for his item is high, all the lowballers will be sent packing. 30% below the asking price – really?..

Des
Des

Look, there is a difference between selling a PS3 (which all look basically the same) and selling a piece of furniture or an appliance. The VAST majority of items sold on CL are not current model electronic devices. So yes, pics sell and if you can show up when you say you will you’re ahead of most CL flakes.

csdx
csdx

“The VAST majority of items sold on CL are not current model electronic devices”

[citation needed]

Last time I had looked for stuff on craigslist there were a fair amount of game systems, i-bling, and e-readers and the like. I suspect that some people are resellers much like an ebay store would be doing.

Brian Carr
Brian Carr

I’m not proud of this, but there have been a few times where I’ve grabbed something for free and then turn around and sold it on Craig’s List. I feel kind of bad, but not bad enough to not deposit the extra cash.

Erin
Erin

Don’t feel bad. They could have sold it, but they didn’t, maybe because they just wanted to get rid of the item quickly and didn’t want to deal with a sale.

BTW, how is Ryan dealing with his taxes? Seems like a lot of work to inventory all of these deals. Not that that should deter anyone from doing it, but it’s worth considering.

Andrea
Andrea

Yes, don’t feel bad. I gave away a lot of things -I just wanted them out of my house/my mom’s house. If someone wanted to take them for use or sale- I was just glad the stuff was gone.

Jane
Jane

Obviously this is fine to do, but if I’m giving a working washer away for free, I would much rather it go to someone who is actually going to use it and can really benefit from the deal. Of course, he’s benefiting from the deal as well. But it’s really the same principal as scalpers, although somewhat less offensive. You take all the good stuff that is priced low and fairly and raise the price. Sure, you can argue that the person that buys the previously free washer would have never probably gotten it for nothing. You can argue you… Read more »

Jane
Jane

Honestly, the more I think about this, the more likely I am in the future to drop my free or low priced items at Goodwill rather than offering them on Craigslist. If there are that many people re-selling on Craigslist, then I imagine many of my things are going to them. I don’t think you probably tell people in your e-mail “I’m going to re-sell this for profit.” You probably just say you could use it. I would rather the profit go to Goodwill than some unknown individual. Call me naive but I was often offering things for free on… Read more »

Tonya
Tonya

I usually put free stuff on Freecycle. If you get something on Freecycle, it’s illegal to resell it. I’m surprised Craigslist doesn’t have the same rules for free stuff obtained on their site. Seems like it would let the free stuff go to people who truly are in need, not just those who are looking to turn a quick profit.

Ru
Ru

You can make money from Freecycle though- my mother uses freecycle to get fabric and yarn that I might like. Sometimes I use it to make something for myself or a gift for a friend, but occasionally I have used materials I got for free to create something that I then sold.

I don’t feel bad about it, because I sell all my goods on Ebay with a starting bid of 99p, so people can get some nice handmade things for cheap, I get space in my house and some money to go towards my university costs.

Tom
Tom

I think it is more unethical than it is illegal to resell items off of freecycle.

Steve
Steve

Against the rules, but the rules are not legally enforceable.

We gave away some stuff on CL last time we moved. I didn’t mind that some people were going to resell it, necessarily. I did mind that they were probably going to just wipe the mold off and sell it at a non-moldy price to someone unsuspecting. And I did mind that one guy was “casing” the place, asking not just “what else are you giving away” but also “Are you giving that away? How about that?”

kate
kate

What?! Are you kidding me? “If you get free stuff its illegal to sale it”… You can’t be serious right? What if I got something free, and say I used it for two years and threw it in the garage sale—is there a Free Stuff Gestapo now in America too? Seriously, lighten up.

Johana
Johana

Wow. I am amazed why anyone would offer something for free on Craigslist. Goodwill offers our “challenged” population an opportunity to work with dignity through the proceeds of donated items. That’s where my freebies go.

xtine
xtine

Not everything is appropriate for Goodwill. I give things away on craigslist that are used construction materials that are typically too big for me to shlep over to the used construction stuff shop. There are many examples of times when it is best to just put something on the curb with a FREE sign. And, the ethics of what the recipient does with it are in your own head. I want something gone and I don’t want to deal with dickering for a few bucks. What the next person does, more power to em…

Bella
Bella

I do send most stuff to Goodwill but some things are cumbersome to move, or Goodwill won’t take. For example – I had a bunch of climbing roses revert to their wild rose stock – they no longer fit my garden and were unruly and hard to take care of, I pulled them up, put them on the side of the house and posted them to craigslist for free. I imagine whomever got them installed them in a part of their garden where they looked good. I they resold them – I don’t care – I just wanted them out… Read more »

CK
CK

Jane….Goodwill SELLS it too. What’s the difference. So does, Salvation Army, etc. They sell the stuff people donate for free AND I might add the drop-offs in WA are getting VERY picky. A friend said she tried dropping off used clothing (her clothes are top-notch by the way) and she had just pulled them out of the drawers to clear out anything that didn’t fit. They were clean and put in the drawers. The Goodwill guy asked her if she had washed them and she told him they were washed and stored in the drawers before being bagged up. He… Read more »

Mike Moyer
Mike Moyer

There are two types of free listings on craigslist. First, there are people who list their washer cheap to help someone in need. I agree to some degree that people take advantage of that for profit. However the vast MAJORITY of free and cheap listing on craigslist are you’re average middle class over consumer who is moving this weekend and must sell their bedroom set by tomorrow. I personally have no problem taking advantage of that situation. Ultimately it’s up to the seller to determine if the buyer has good or bad intentions. You can refuse any sale you’d like…

L
L

I agree; we often give stuff away for free just to get rid of it!! Sometimes I want the space and less clutter more than I want the money for it. We gave away our old washer and dryer – they made have brought us $50 or $100, but I just wanted them gone and didn’t want to hassle with it anymore. I don’t care what the person did with them – he may or may not have made a profit, not my business. If I chose to give it away free or cheap, who am I to fault the… Read more »

Des
Des

When I give items away for free on CL it is usually for my own convenience – I don’t want to deal with trying to price and sell it, and manage all the emails and CL-flakes. I know that if I put it up for free it will be gone in a day and I’ll be done with it. If someone else can make a profit off that, more power to them. Also, I don’t know about your area, but Goodwill (et al) won’t take baby items around here (strollers, cribs, car seats, etc). They said it was a liability… Read more »

babysteps
babysteps

Exactly. We moved recently and in the last week I suddenly realized that I had 12 (!) more file cabinets than I wanted to take. Craig’s list Free, 1st come 1st served, and no judgements as to “winner” – I also had a grape press I was giving away, I had one potential taker who tried to guilt me into holding it for her (well, her son). First come is a great concept!! Grape press went to someone else, really I didn’t care – I just wanted to get the stuff out before we closed on the sale of the… Read more »

Ryan
Ryan

Hi Jane, thanks for the comments. I’m not sure if it’s fair to call it scalping. First, probably 90% of appliances that I resell I’ve purchased, not received free. Buying low and selling for more is basic business. If there is a problem with it being done on Craigslist, one needs to take issue how most other businesses operate. “You take all the good stuff that is priced low and fairly and raise the price.” I buy almost brand new dishwashers for $25, nice dryers for $10 etc. That is low, but not fairly priced. I raise it to a… Read more »

Jane
Jane

Ryan – Thanks for your reply. Your description of your business and the quick turn around makes me think it is even more like scalping than before. Most definitions of scalping that I saw stressed the amassing of large quantities of something and the quick turn around of them for profit. If you buy and sell an item in the same day for profit, then I don’t imagine you are really improving the product that much. I find it entirely different if someone is repairing broken items and reselling them. But, say, Mr. Smith needs to buy a washer and… Read more »

Ryan
Ryan

I hear what you are saying about Mr. Smith. He wants a cheap washer. Let’s keep going with the story. Mr. Smith is busy so he missed a few nice washers ($25 each) in the morning. Ryan drove with his trailer and picked them up and brought them home and put them up for $75 each. Mr. Smith gets on the computer and sees washers from $25-$400. Mr. Smith chooses not to buy Ryan’s nice white washer for $75 and buys cream colored washer for $25 that Ryan passed up because there wasn’t any money to be made in the… Read more »

Liddy
Liddy

Jane, Wow—-do NOT include me in your comments-aside from the Unfortunate mess and loss to the foreclosed families–YES, that is distasteful to most… However, your post come across as completely down on ANYONE who is sharp and enterprising and has found a creative and HONEST way to support himself and his family–you who seem so “help the family’ and honestly—I find your comments offensive–especially in this day where SO many people are out of work… buying low and selling high–IS how 99.9 percent of business IS done–in order to “make” a profit, pay for overhead, materials, time and energy. Where… Read more »

tom
tom

Sounds like you’re a dirty Communist. I’m sorry you’ve been naive your whole life, but that is how the WORLD works. Every company buys low and sells high, that is called PROFIT.

CincyCat
CincyCat

This entire conversation makes me chuckle.

Jane, what do you think your favorite grocery or apparel store does?

They buy merchandise for as low as they possibly can, then turn around & sell it for as high as the market will bear.

It’s basic economics.

Mark C
Mark C

“Obviously this is fine to do, but if I’m giving a working washer away for free, I would much rather it go to someone who is actually going to use it and can really benefit from the deal.”

Hilarious So if someone sells your washer for $50, he’s not benefiting from the deal? What if what he really needed was a dryer? So he sells your washer for $50 and turns around and buys a used dryer with the money. So now he has a free dryer instead of a free washer. Big difference, eh?

SB @ One Cent At A Time
SB @ One Cent At A Time

This s very interesting story, that’s why I read GRS every day. Yes do like to know more about CL arbitrage. I bought things and sold things, but that’s on need basis.

Mark
Mark

I used to do basically the same thing about a decade ago, browsing online forums for deals, and reselling on eBay. I practically put myself through college selling Microsoft software – people were simply not aware of the true value of that disc that came with their PC. It was practically free money, but once the idea really caught on, it became really, really difficult. The poster touches on this a bit, how the good deals are gone in seconds. He’s not exaggerating. It wasn’t always like this, and even back when it was a little known way to make… Read more »

Nancy L.
Nancy L.

I would also imagine that there is the potential for your finds to take up a lot of space in your house if you don’t find an interested buyer immediately. Especially if you are dealing with washing machines, fridges, etc.

Mark
Mark

Also, very frankly, you have to learn not to ask where things come from. There are a LOT of stolen goods being sold online, especially on craigslist. If you’re not comfortable with that, don’t even bother.

Ryan
Ryan

There are definitely a lot of stolen goods on craigslist. The best way to deal with that is to buy items that have a story. How long have you owned the item? When did you buy it and from whom? I personally go to each person’s house when I make purchases. Sometimes people are uncomfortable and want to meet at a store etc. Usually people aren’t going to want to sell a stolen item out of their home, as you find out where they live etc. Another point is maybe stay away from high theft items like tools, bikes, car… Read more »

Andrea
Andrea

I never thought about that- but as I have only bought yarn on Craigslist- I’m pretty sure it was not “hot”

Kenny Zales
Kenny Zales

Not so fast. Haven’t you heard about the Craigslist Grannies? They’d commit hold-ups with knitting needles while exclaiming: Your yarn or your life! Knit one, pearl you!

Mark
Mark

I would love to here more stories from Ryan on what he has done on Craigslist

Alexandra
Alexandra

Yes, I would like to read a guest post from Ryan. This is so totally not my personality to actually do something like that. I gave away all my baby items – things I paid hundreds of dollars for, becuase they were starting to clutter up my spare room. The time and effort it would take to have to take a picture, list it, receive emails, meet the people and one-by-one get rid of the things seemed not worth the trouble. I ended up calling a couple that I knew was expecting, asking if they needed baby stuff, and then… Read more »

Alexandra
Alexandra

P.S. Love that dog!

J.D. Roth
J.D. Roth

iPhone + instagram + ugly dog begging for my food = perfect blog photo

Jen
Jen

J.D., being a pug owner myself, I have to say that Frank isn’t ugly…he’s pugly! 🙂

Marsha
Marsha

I did something similar years ago, but with garage sales and trash-picking. My kids were small and I wanted to earn some extra money without having to put them in child care. We would go to several garage sales each week to look for items for ourselves, and I’d buy additional items I knew I could easily sell for higher prices. I would also go out in the evenings and scope the curbs. At the end of the summer, I’d have a huge garage sale myself. I usually earned enough to finance a family vacation and other extras that didn’t… Read more »

Anne Cross
Anne Cross

I’m a member of Freecycle, where some people post requests for things they want and some post ads for things they want to get rid of — all for free and in a commutarian spirit. Last winter, a guy posted a wanted ad for a printer; he said he was going back to school and couldn’t afford one. I had an extra, so I was very happy to give it to him. When he picked it up, I noticed he had a back seat full of printers, and a few weeks later, I saw him post again on Freecycle for… Read more »

Becka
Becka

I would definitely feel upset if someone sold something I freecycled to them, and would consider reporting them to the community mod. That’s completely contrary to the spirit of the movement.

Ryan
Ryan

I don’t use Freecycle. However, the only way I can suggest to people to handle situations like this is to give the item away to someone you know. Successful, meaningful charity usually takes more work than simply throwing something up on Freecycle and Craigslist. Those avenues are easy, but are also easily exploited. There are some creative people out there that I’m sure could come up with a wiser way to give items away. I’d love to hear about them. I’ll write more about this issue when I have some more time to think about it.

Andrea
Andrea

we have a place called Wider Circle which gives household items directly to people who have been homeless but now have a home/have a fire/other disaster -locally. They have specific things that they accept and so I gave them the better housewares from my mom’s house. I also work with a shelter and now I give them any decent clothing/shoes/bedding that we have to give away. I have given some good quality glassware/porcelain/pottery to a particular thrift shop which is run only by volunteers and divides all proceeds among several local charities. And for wornout houshold textiles like towels,small rugs,… Read more »

Steve
Steve

The purpose of Freecycle is not to help people in need. It is to keep items out of landfills. In the group covering my area, there is a strictly enforced that you can’t say give any sob stories in your WANT post.

Laura
Laura

I completely agree– the STATED purpose of freecycle is to prevent things from going to the landfill by giving items that are not useful to you to someone else. My biggest pet peeve with freecycle is the “freeloaders” who constantly post that they need new furniture because they “just moved,” etc. I’m sorry– I don’t mean to be derogatory to someone in need, but the purpose of freecycle is NOT to request that other people give you lots of free stuff. We have almost daily requests for things like computers, and since freecycle (at least in our area) is a… Read more »

Andrea
Andrea

I do use Freecycle and I’m pretty sure none of my stuff was directly resold- although I was happy to give someone a bag of broken costume jewelry which she refashions into new items. I was sorry when I offered to drop something off for someone and realized when I got there(and did put the item on her gross porch) that she was a hoarder. Her porch was piled high with stuff/junk as was her small lawn area. Since what I had offered was a small craft item- I hoped by putting it on her door handle- she might actually… Read more »

Matt
Matt

I’ve bought – and sold – quite a bit of stuff on Craigslist. Most of the time I’m very certain it’s not stolen – so I don’t know where that idea comes from – perhaps it depends on where you live? Or perhaps I’m just not looking in the categories where things are frequently stolen. I don’t see any problem at all with someone who knows the market buying stuff cheap and selling at market price. I think it makes sense, and since the sellers are getting what they consider enough, that’s fine. With stuff like large appliances in particular,… Read more »

Mark
Mark

Any do-gooder community will eventually be exploited by resellers. It’s only a matter of time, if there’s money to be made. If anything they’ll just get better at concealing their true motives. Obviously there are a lot of ethical concerns here, and they’re valid. But if you’re going to give something away online of any value, assume its going to a reseller. They might sound like parasites, but they’re often providing a very valuable service – waste disposal and some easy cash in your pocket. And the item is going to someone else to be used, not to be trashed.… Read more »

RosaMN
RosaMN

When we used to do food redistribution, occasionally we’d find that the people picking up our free food were reselling it or using it at a restaurant or food cart. Some of my fellow volunteers would get really mad (and of course it’s illegal for the reseller – the Good Samaritan laws that protect people donating, don’t protect people selling). But it never really bothered me – folks who just desired to retire early are way less common at the bottom of the economic ladder than folks who just really, really need the money. If you’re getting rid of something… Read more »

Everyday+Tips
Everyday+Tips

I love the photo of that dog!

This post reminded me that I need to list some books on Amazon!

One thing I did was I bought a duplicate of a Harry Potter Lego set last Christmas. I was going to take it back, but then I decided to hold on to it awhile. I will then sell it when it is out of production and hopefully make a little money on it.

Panda
Panda

My bf and I do this with Lego sets as well.

Cathie
Cathie

Good plan! My son 8 yr. old son is CONSTANTLY perusing ebay for Legos he “needs.” I will have to remember this, to hedge his spending. And also, I would LOVE to read a guest post by Ryan. I am intrigued by what he does. We had a reseller come get our old fridge within hours of listing it on CL. He told us he fixes them up and resells them, and he told us that he could probably get $100 for the one he bought from us for $25. We were happy to help, and considered it a win-win.… Read more »

SavageChris
SavageChris

First time poster(long time reader):

This actually scares me. I used to LOVE ebay. You could find almost anything you wanted and get a good price for it. Then, all the “Make your living on Ebay!” books started coming out and the hunt for a good deal started feeling like wading through a garbage dump.

I suppose nothing (good) lasts forever.

Ken
Ken

I agree. I also used to be able to find good deals on eBay for things I needed or just really wanted. It was both thrilling and economical. Then as you said, there came a time where I would try to bid on things and then they would be snapped up at the last second every time by what I assume were automated systems or scripts for the purposes of reselling. I’m all for making a buck if you are providing a service or goods someone needs, but I see no real value being added to the system by arbitrage.… Read more »

Postdoc
Postdoc

I don’t get this attitude. Before, the economic surplus was going to the buyer (i.e., sellers weren’t getting as much as they should), and now the economic surplus is split more evenly between buyers and sellers. I like knowing that if I need to sell a rather esoteric item that I no longer need, there will be a market for it. This didn’t use to be the case, as you point out. As for the automated scripts, have you tried using them yourself? Many are free and simple. I don’t use eBay for resale, but I still find these scripts… Read more »

cc
cc

i do this pretty often with amazon. i regularly sell old books and dvd’s we don’t use anymore, and occasionally i’ll just tire of an item that still has value and sell it on amazon. the cool thing is if you bought it on amazon in the first place and go back to sell it later, it tells you when you bought it and how much it was. turns out a lot of electronics and popular games keep their retail values, but many many items are 99 cent duds. it’s worth going through to check though- i just found a… Read more »

anna
anna

How is what he is doing “retirement”? It seems more to me of a job, and not just a job, but a tedious, kind of menial one of calling and being called by strangers, driving around, picking stuff up, dropping stuff off, cleaning and fixing. I’ve done the same kind of buying and selling (craigslist and ebay), when strapped for cash, and it isn’t something I’d ever use junk-picking to replace a career that has some positive impact on the world. Retirement shouldn’t just mean more work with less consequence.

J.D. Roth
J.D. Roth

Anna, I think you’re conflating Jacob and Ryan. It’s Jacob who writes about early retirement; Ryan is one of his readers.

Frugal+Texas+Gal
Frugal+Texas+Gal

Anna (boy am I posting alot today), I’ll also note that while you find what i do tedious, I love it, and it sounds like this guy does to. I adore saturday mornings, thrift shops, flea markets and the like-I consider it an adventure. and since I (and he) only buy things I know about and know how to fix, in my case its a case of having a job that is also a passion.

Ryan
Ryan

Hi Anna, Work is work. I’m definitely not escaping work by buying/selling on craigslist. However, there are some benefits. I set my own hours and can make as much or as little as I would like, depending on how much time I’m willing to put in each week. It can be a little dirty at times, buying a used stainless wall oven that needs a little cleaning for $100. But when it’s resold for what it’s worth for $350, I got my hands dirty, got a workout cleaning it up a little and then made $250 on it. Someone got… Read more »

Will
Will

This is a neat idea. I have done plenty of buying and selling on eBay and Craigslist myself over the years and I will say that it is a lot of hard and tedious work.

Taking pictures, fielding e-mails and phone calls, posting/updating/removing listings, etc. are just part of the work. People forget about the driving, shipping, packaging, etc.

I’ve made a lot of money doing it and it did help me pay off a good bit of debt, but it really is nearly a second full time job so anyone interested should really keep that in mind.

Katie
Katie

Heh, in my industry, arbitrage gets people tossed into federal prison. It’s a funny mental shift to see it discussed as a good thing.

That said, this is the kind of thing that can make someone a living, sure, but isn’t really what I’d want my life to be. If you have a choice (and I know that not everyone does), isn’t it nicer to put your time and effort into jobs that add something to society?

Matt
Matt

This is the 2nd comment mentioning arbitrage as having “no value to society.” I think there are two sides to that: if it’s simply what JD referenced in terms of immediately reselling in the same forum, perhaps it doesn’t have value. However, in many cases it serves the function of getting things from those who have them to those who want/need them – in which case it offers at least as much value as many other jobs.

Katie
Katie

This is only true if the people who need them wouldn’t have gotten them without the middle man. Sometimes that’s entirely valid, but in the case of buying something on Craigslist and then reselling it on Craigslist, I’m not sure I see how. I think a different argument can be made for people who, say, scour used books stores for underpriced, valuable books and then sell them on-line for much more – they’re getting books into the hands of the people who value that particular book but may not be local; not just whoever wanders into a given used book… Read more »

Des
Des

That is true – but when I am in the market for an appliance I keep my eye on the appliance section of CL – not the free section. In fact, I would just assume that any appliance in the free section wouldn’t be worth my time. Also, free listing don’t usually have pictures, and I wouldn’t respond to an ad without pictures. My time is valuable, and CL is full of flakes. If this person is willing to take the time to pick up the item from the free ad, verify it works, and post a new ad with… Read more »

chacha1
chacha1

Arbitrage just means taking advantage of a price differential. At its simplest, it means buy low and sell high. That’s what EVERYONE tries to do in a capitalist economy.

There’s no “good” or “bad” about it except in the relatively rare cases where people are intentionally breaking laws to do it (e.g. insider trading).

Ryan
Ryan

Here’s a few thoughts on the value it adds. 1. Very quick sale for the seller, which is their point. 2. Personally, I primarily deal in appliances, partially because it’s easiest to offer a needed service, delivery/installation/haul away of the appliances. If you don’t have a truck/trailer then it’s a potentially expensive headache to pick up or find someone that will deliver the appliance. 3. Good products at an excellent price, cleaned up and sometimes delivered. I do well and get repeat business because I really try to help the people I sell to. I’m also buy items specifically for… Read more »

Garrett
Garrett

I’d also like to address your “no value to society” comment. Let’s say A wants to get rid of a washer that holds to value to him, so A posts it on CL for free. B then removes the washer for him, since the washer holds more value for B than for A. A is happy because the washer is gone and B is happy because he thinks he can resell it for profit. B reposts said washer on CL for $100 and it is seen by C, who is in need of an affordable washer. C decides that he… Read more »

Ryan
Ryan
Well said. You guys have better answers than I do 🙂 This is a pretty cool little community.
Angelo
Angelo

“You assert that this situation is worse for society than is the situation where A sells directly to C for $100, in which only 2 people are happy and satisfied. I say that both are good for society, and if anything the first situation is better since it makes 3 people happy instead of 2.” Interesting. However I think the original statement was benefit to society via adding value. With the direct sale of A to C, B is free to do something that adds more value for society–which was stated in the original post. (“isn’t it nicer to put… Read more »

JT
JT

Let us hope that no IRS agents read your blog. I somehow suspect that Ryan does not calculate his cost basis and report his profits.

J.D. Roth
J.D. Roth

Just because you suspect it doesn’t make it so. We asked Ryan about this on Saturday, and he says he documents every purchase and sale.

SupportingParents
SupportingParents

JT, do you report every item you buy online and pay taxes on them? If not, you are breaking the law as well.

It would be much more polite to pose the question that assume the answer.

matt
matt

also a quick tidbit from the IRS, if you’ve ever TRADED anything, including rent, lawn work or any other item, you need to pay taxes on it. That makes me a civil disobedient

Frugal+Texas+Gal
Frugal+Texas+Gal

Anna (and ot hers) this is what I do for a career (or at least an income streeam) however I dont just go on craigslist, I also do yard sales and thrift shops (not a big ebay fan these days). Rather than being tedious, a different thing is done every day. I started doing it just to resell books but now I do ther things as well. it helps if you have some fixing up skills but sometimes-I just bought some Department 56 village pieces for fifteen dollars and resold them for thirty bucks.

Frugal+Texas+Gal
Frugal+Texas+Gal

Ill follow up and the commends regarding value-much of the stuff I buy and fix up or resell are things that would end up in a goodwill bulk pile and MIGHT get purchaed or used or recycled (some of the good books I buy that others dont know are good). Once I resell them, they have a home and dont go into the landfill. I figure thats at least as much value towards society as lots of other jobs.

Matt
Matt

I think if you’re FIXING something as opposed to reselling it there’s an entirely different story going on (and it’s not arbitrage). In that case, you’re exchanging your expertise in fixing something for increased value of that thing.

Frugal+Texas+Gal
Frugal+Texas+Gal

Im certainly not fixing everything. I buy or take free books and resell them on amazon (as do most amazon used sellers). I buy things from yard sales and thrift shops and resell them. I have never taken a freecycle thing and resold it, that I can recall. In this day and age, people getting rid of stuff can easily find the value if they want to. Most folks simply want it gone-and thats fine. But what I do with it after that……

Don
Don

I’d love to hear more about Ryan’s methods! I don’t know if I could make a living doing this, but might be nice to supplement my income a little bit!

Ryan
Ryan
Hi Don, That will be my goal in writing the upcoming article. It’s best to start part-time anyway. It only takes a few items a month to increase your income a nice amount. I encourage people to start with something they know. Maybe it’s tools, maybe it’s small engine’s, furniture, computers, appliances etc. Hobby turned into a little extra cash. For the person that knows cars…could be a lot of money.
Erin @ SavingIndy.com
Erin @ SavingIndy.com

I flip furniture on Craigslist too! I love that you posted about this 🙂 I just found a coffee table on the side of the road, refinished it and sold it on Craigslist for $140! Can’t beat that!! – Erin

Adrienne
Adrienne

My favorite form of Arbitrage was using 0% credit card transfers and high interest savings accounts. The rates are so low right now it doesn’t seem worth it to me but a few years ago I made several thousand $ and all I had to do was some on-line payments. I love craigslist and I often use it for high cost items but it seems like it would be a lot of work (just in driving all over town) to make $. I have accidentally made $ from craigslist – bought a couch – used for 3 yrs – sold… Read more »

Erin @ SavingIndy.com
Erin @ SavingIndy.com

I sometimes refinish furniture and re-sell it on craigslist. I just got a free coffee table, refinished it and sold it for $140! Not a bad deal 🙂

Mike Moyer
Mike Moyer

I have actually done this in my life. For about 5 months when I was in college, I would actually buy and sell motorcycles for 1k to 2k profit. I became really good and knowing exactly how much each type would sell for. I use the same technique for buying luxury items, or just saving money in general. For example when I moved, I didn’t want to pay the truck rental fee + gas + trailer to dolly my car. So, I bought a small trailer for my car for $800 dollars. I moved and even kept it 2 years… Read more »

Simon
Simon

Hey, I did the same in Ireland for a while. I would buy bicycles for 30 or 40 euros on gumtree ( our local CL), spend 10 minutes to clean them and tighten the brakes, and then sell them for 100 euros. I was working part time and had no money to invest, so I just bought one bikes, sold it, spend the money in 2 bikes, sold them, bought more bikes, and so on. After a few months I got a full time job, and my 40 initial euros had become 2000, plus 1 very good bike for myself… Read more »

jennypenny
jennypenny

I’m not sure I understand the objections to reselling things that were obtained for less or free. Isn’t that what antique dealers and flea market people and pawn shop owners have been doing for decades? I don’t get why it’s not ok just because it’s online now.

Tyler Karaszewski
Tyler Karaszewski

This is basically how people get rich on wall street as well, except you use stocks instead of refrigerators.

It’s a pretty effective way for a small number of people to get rich without actually creating anything of value.

Kevin
Kevin

Again, you’re buying from people who want to sell and selling to people who want to buy. How is that not a service?

Tyler Karaszewski
Tyler Karaszewski

You have to *within seconds* to prevent these people from finding each other on their own. If you didn’t offer this “service”what would be different except that the eventual buyers would have more money in their pockets and you would have less?

Tyler Karaszewski
Tyler Karaszewski

…have to *react* within seconds…

Early+Retirement+Extreme
Early+Retirement+Extreme

Arbitrage creates more stable and consistent pricing. Without arbitrage some people would get better deals, but other people would get worse deals (relative to the better deals) and consequently everybody would spend a lot more time hunting for good deals.

With the arbitrager in place, all prices would be similar and so nobody would need to spend 5 minutes looking through the listings for good deals.

You need to compare to sum total of this lost time for everybody (say 5 minutes times 50 people) to the money the arbitrager makes (say $50).

Tyler Karaszewski
Tyler Karaszewski

This argument is weak. You’re saying the value provided by the arbitrager is that he causes a list of items for sale to look like this: 1) Used iPhone 4: $150 2) Used iPhone 4: $150 3) Used iPhone 4: $150 4) Used iPhone 4: $150 5) Used iPhone 4: $150 6) Used iPhone 4: $150 7) Used iPhone 4: $150 Instead of looking like this: 1) Used iPhone 4: $150 2) Used iPhone 4: $120 3) Used iPhone 4: $135 4) Used iPhone 4: $99 5) Used iPhone 4: $115 6) Used iPhone 4: $75 7) Used iPhone 4:… Read more »

chacha1
chacha1

I think the “value” argument with regard to capital markets is that capital transactions (that is, second and third parties buying and selling bits of a company’s capitalization) foster investment in other economic sectors. The rationale being that people take their stock-market profits and plow them into their own businesses, into venture capital, into real estate, and sometimes even into philanthropy. And in fact many successful capital investors do exactly that. The first party, meanwhile, by selling off bits of its capitalization (stock) garners crucial operating funds. It’s not my field, but I’m pretty sure if the existing U.S. auto… Read more »

kailey
kailey

I would be interested in knowing how he picks up all these appliances, what kind of transporation he uses to pick up and deliver, and of course, where he stores the appliances. What is the turn around time from purchase of a washer to selling a washer on CL?

Ryan
Ryan
Toyota Sienna pulling a trailer. I store them in my garage and every once in a while under a covered area in my backyard. The average time from purchase to sale is less than a day. Sometimes it can take longer if inventory is way up or certain items that have a more narrow appeal (Adult Diapers etc) 🙂

I’ll go into more detail in the post. Thanks for the question!

Sharon
Sharon

We’ve always been consumers of thrift store, garage sale, craigslist type junk (BTW-today is National Thrift Store day – so I heard on the radio). One man’s junk is another man’s treasure, the saying goes. If it provides an income for someone else – so be it. No one is holding a gun to their head to make them buy it. For some of us – finding that treasure is a hobby! I just need to turn my hobby around and start selling more! I’d be interested in hearing more.

J.D. Roth
J.D. Roth

I should have mentioned this in the post! On a related note: One of my cousins used to support her family by buying the contents of abandoned storage units. They’d buy this stuff at auction, sort through it, and then resell it. (Don’t recall how they resold it. Did they have a store? Frequent garage sales? Some other method?)

Becka
Becka

The show Auction Hunters is about a pair who do this. It’s… weird, sometimes.

Claudia
Claudia

I agree. This practice gives me shivers. My mother’s parents had some of their things sold out from under them during a move decades ago, which is why we have so few photos of my mom as a child. Sad.

Andreas
Andreas

Sad to hear you lost your pictures. But, people that buy estate stuff provides a valuable service.

My wife’s aunt passed away some time ago, and her (nonpersonal) stuff sits in a rented storage shed far away. I’d love for somone to offer us a some money to take if off our hands and move it out of the storage shed for us.

–Andreas

Paul
Paul

I’ve used CL for buying and selling many times over the years. I typically sell stuff for cheap just so I can spend the least amount of time on it as possible, because the emails, phone calls, and no-shows can eat up a lot of time. Also, now with the wife and kid around, I don’t like the idea of random people coming over to my house. I once had a crew of 3 guys come to pick up a nearly-free TV, but when they got here, it occured to me that it’s not the safest thing to be doing… Read more »

Heather
Heather

I am a creep magnet. About half of the things I’ve sold on Craigslist have somehow involved a potential buyer who had … issues. Like the guy who wanted to make kosher beef Sloppy Joes (in my vegetarian home) for his rabbi who was going to come with him (to my house???) to pick up the George Foreman Grill and have it blessed just in case non-kosher foods had been cooked on it … Or the guy who emailed me literally 50 times after he didn’t meet me at the place we were supposed to meet (he was inside shopping… Read more »

retirebyforty
retirebyforty

That’s great! I’ve buy and sold on CL and didn’t think about making it a business. The buyers are so flaky.

Jennifer
Jennifer

One of my friends does this with books (his specialty). He buys them on half.com, and then resells them on eBay — or is it the other way around? He said that one end usually has more motivated sellers, and the other tends to overpay. He can’t make a full-time living from it, but when he was without a job, it helped.

Sara
Sara

Here’s a general question on the subject, maybe fellow GRS readers can help me out with. One of my hobbies is entering online sweepstakes. I generally win a LOT of beauty products. Some products I use to supplement my beauty habit, but some I want to sell. I have been using eBay but it’s hit or miss and the margin is really low. I’m talking about selling items that have a retail value between $25 and $50. I realize I should probably work on my eBay skills, but is there a better place to sell these? Maybe CL?

Megan E.
Megan E.

You could try CL – but people are usually more wary about stuff like that.

You could also donate it to your local women’s shelter or school…I know it doesn’t make money on the front end, but if you qualify for itemized deductions on your taxes, you can use the amount of the goods as charity…

Paul in cAshburn
Paul in cAshburn

This doesn’t pass the sniff test. If you did not pay anything for a item, and you give it away, I don’t think a tax deduction is allowed. You can only deduct the the lesser of the amount you paid for an item, or the resale value if the item is used or in depreciated condition. If you have zero cost basis for an item, deducting any amount higher than zero is cheating your fellow taxpayers. Here’s an example: A business buys 100 of an item for $5 each, and sells all but two. They donate the remaining two to… Read more »

lawyerette
lawyerette

I’d swap them on Makeupalley.com in exchange for gift cards.

Sara
Sara

Just wanted to say thanks! I do usually donate the cheaper items I win – say, if it’s a lipstick that you can get at CVS for $4 on sale, it’s not worth my time to sell!

I had never heard of MakeupAlley before, but the site looks awesome! Not a lot of money to be made, but maybe can get some more useful stuff. Sometimes I’ll get a special styling product for curly hair (which I DON’T have), or something like that – it’s a great idea to swap them!

Danielle
Danielle

Where would we be without the spirit of entrepreneurship? A little creativity goes a long way!

Alan S
Alan S

I definitely want to see either a guest post or a Q&A!

Susan
Susan

I give a lot away, like my really nice washer & dryer. I don’t know, only when I am really desperate and that will have to be pretty desperate to receive something for free and then make a profit on a resell, but each to his/her own.

Kevin M
Kevin M

I’d like to see a guest post from Ryan as well. Sounds like an interesting story.

Jonathan P
Jonathan P

I found this blog post to be really interesting since I’ve never seen the topic discussed in the realm of personal finance. I’ve been buying and selling items for years on Ebay and Craigslist and its always an interesting and profitable experience if done intelligently. Being a user of Craigslist and ebay through out my college career I really found some opportunities which I still use today to make some side cash. Living in a college town certain things happen every year during certain times (semesters end / semesters being). Students often live in apartment complexes / housing in certain… Read more »

krantcents
krantcents

My niece has acquired many things free from Craigslist. She renovated a house, she sells some of the things online and donates (tax deduction) some items. She does not do very much because she has a full time job. She takes advantage of it very well.

Marcus
Marcus

I have bought and sold quite a bit on CL and have done quite well at getting good deals for myself and friends. One thing I am just now getting into is buying broken stuff on there that I know how to fix and then doing the work and selling it. For example, buying a car with a blown engine, dropping a junk yard engine in and selling for 2k profit. Once again, stay with what you know and you can make out pretty well, and there are less people out there trying to fix broken stuff than is trying… Read more »

Andreas
Andreas

One thing about appliances on Craiglist — with all the foreclosures (I’m in AZ), a lot of the appliances are taken from homes right before foreclosure. Although technically not stealing from the bank, it’s questionable ethically to sell appliances out of the home right before a foreclosure, especially built-in ones. I’ve even heard of people selling the front door, light fixtures, toilets, windows, etc. I just bought and moved into a previously foreclosed home, and the built-in microwave was missing. I picked up another built-in microwave ($200 for what would have cost me $800 new) from someone on CL that… Read more »

Nancy
Nancy

IMHO, I don’t like the practice of arbitrage on Craigslist. To me, it feels like the person is ripping off the seller and buyer market for what the product is worth and turning over the profit. Someone who could really use that free couch won’t be able to without a marked up price tag. Personally, I don’t believe this is a very moral or ethical way of making money. I have nothing against flea markets, vintage shops, pawn shops, etc because they provide a service – they collect inventory from all over the place and hold it in stock for… Read more »

Mick
Mick

My friend and I had a competition on WOW. We both started with 500 gold and competed to see who could make the most profit. I ended up with roughly 25k and he crushed me with 50k.

I never knew dust could be worth so much…

Angela May
Angela May

I’m kind of surprised I’m the first to mention this in this thread but, JD, have you read Cory Doctorow’s book “For The Win”?

http://craphound.com/ftw/

It’s a science fiction book that revolves around MMORPG economies and also talks about in-game arbitrage 🙂 It’s a really good book, based on this post I think you’d like it.

question question
question question

This whole story sounds like more work than a regular job.

Plus on a regular job I get benefits like a salary health insurance, paid vacation, 401k match, life and disability insurance, plus enhancing my technical skills. How do get all of these selling stuff on CL or Ebay?

Mark
Mark

In reply to Question question, Well, that’s pretty much it right there. You don’t get any benefits, and it’s usually a hell of a lot more work than the office job. Your takeaway probably isnt going to be significantly more than a decent job. What you do get is the ultimate in freedom. No one to answer to but yourself. Don’t even need to keep a storefront or business running. Wake up whenever you please. No employees to deal with, just short interactions with usually satisfied customers. The ability to blow off work any time for as long as you… Read more »

Ryan
Ryan

It’s definitely not an escape from work. It’s hard work. I get a good workout from moving huge appliances around. I’m big on appliances because of the high demand and good return. However, if someone wants to work less, smaller items are the way to go. Electronics, computers, monitors, phones, tablets, jewelry etc If you cut your expenses down to an absolute minimum, you can have two really good days and take the rest of the week off, no problem. I haven’t been doing that yet as I’m paying off our debt, saving for our trip out to the Big… Read more »

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