Investing risks

Maximus

I've started to explore investing into LEGO over the past week and I'm curious what kind of risks and considerations I should be looking into that I may not have covered already. Stuff other than fees, shipping materiel, storage etc. I should add that I'm aware that this isn't a get rich quick scheme. Frankly I like the idea of building up a collection of sets and waiting months or years to cash out on the rewards.

CCC

There are a number if things to consider.

Storage is more than about somewhere to keep it, you need dry space with not too much temperature variation, don’t just stack them, animal/vermin free, somewhere where sets are easy to find and you don't have to move others to find the one you want to minimise crushing and wear. And obviously secure to avoid theft.

Volume. If you move house, you'll find stock takes a lot of volume and needs to be moved carefully.

Popularity, demand,  supply.LEGO has gone up in popularity but so has investing in it. Will it still be as popular in 5 or 10 years, will people want older sets when there are even more good new ones, will the market be flooded with loads of stored sets.

Other investments,  would your money do better elsewhere for doing nothing.

Hard work. It is hard work selling, boxing, shipping. It can also be stressful when you sell a valuable set to an unknown username on the Internet. 

Huw

Or, to paraphrase what @ccc said, it's more trouble than it's worth.

There are too many sets released nowadays, too many people hoping to get rich on the back of them, and the rate of improvement makes older sets obsolete much quicker so much less desirable in, say, 5 years.

The days of the  'Cafe Corner phenomenon' are over.

CCC

There is still money to be made, if you can get a low enough buy in price. But that is more about minimising cost price which is often somewhat random rather than maximising sale price through well-thought out plans and knowledge.

Minifigures are still holding value well and cheap and easy to store and post, but you really need to pick the winners. Some do really well while others even in the same set don't. You have to know the subject matter very well and risk whether they do an obscure but loved character again. It is amazing how some Ninjago figures have rocketed in price. Unfortunately the ones that do well tend to be the ones in expensive sets. If you can buy sets, remove the more unique figures, and sell the rest of the set for close to what you paid for it then that is a good investment. Cheap and unique figures that had negligible costs and easy to store. But that rarely happens these days. And is a lot of work to know which ones to target.

Stuff I sell off that does really well tends to be stuff that they don't make any more so has little competition. None of that was planned as such. I bought stuff I enjoyed more than through any investment analysis. I would have been happy enough to open up my "spare" sets if the market bottomed out. LOTR figures and sets do really well. Superheroes sets of similar size from the same era do terrible in comparison. I still have some sealed superheroes sets that I could probably sell for RRP but not much more. Collectable Minifigures from the first ten or so (and definitely from the first three) series continue to do well but of course too late to buy them. Whereas newer series, I wouldn't invest in those (and haven't since probably series 8) as investors learnt to buy boxes and sell them in their 100s. Individual ones may be values, but not blind ones from the boxes.

Star Wars Planets also sell well, presumably as they have no competition from other similar Star Wars sets. Whereas I wouldn't invest in a minifigure scale X-wing or landspeeder, as they will be done again and better.

I know a lot of people look towards the tree house as the next big thing and often compare it to the Old Fishing Store. Personally I don't see it. It has been out too long, at a time when LEGO has huge popularity and LEGO investment has grown so much that everyone knows to buy and store sets. No doubt you can make a little on it after retirement, but you'd make significantly more if you can find and buy just about any current decent set at 50% off RRP. Dumb luck rather than planned investment wins these days.

lowlead

^^ Yep.

Reselling is still going strong, obviously, but I would say the 'bubble' has either burst or at the very least shrunk since those salad days.  One way to go is to sign up to be an Amazon Prime re-seller, but they certainly take their cut - and it sounds like you're not sitting on any significant inventory yet.

For my part, I operated BrickPortUSA (closed) with one rule: Only invest in themes or a collection you wouldn't mind getting stuck with forever.

mr_benn

The biggest risk is that you're not very good at it...

In 2020 I took the opportunity to sell a whole heap of MISB sets via Ebay that I had originally bought with a plan to building/using the bricks, but never got round to it.  I'd never bought them to sell later on.  I have to admit that I was genuinely surprised by what absolutely flew out the door at a pretty high markup, and then those that only sold after quite some time sitting around with some price reductions.  There were some sets that I was making 6, maybe even 7x RRP on - but those were really the exceptions - some stuff never moved to the extent that I decided I'd rather keep it and part it out than sell so low.  

You can play the game yourself.  Use Brickset to go find sets released say - 5 years ago in 2017.  Give yourself £1000 to play with, and then virtually buy the sets you reckon - and remember you won't have the same hindsight you'll have in this activity - will make a tidy profit.  Now go and check the Ebay SOLD listings for what things have actually gone for - ignore the prices of what's up for sale, that can tell you nothing other than the fact that people often think stuff is worth more than it is.  See if you make anything resembling a decent profit that way - and remember, your time is worth money, and you have to pay for P&P (and I would recommend insurance) too, along with any selling fees - Ebay, Paypal, whatever - all the time your margins are shrinking.

As @Huw said - I think that buying simply to sell really isn't worth the effort anymore unless you're willing to put a huge amount of your own resource into it - which I think would make the hobby a LOT less fun. 

Maximus

CCC said:

There is still money to be made, if you can get a low enough buy in price. But that is more about minimising cost price which is often somewhat random rather than maximising sale price through well-thought out plans and knowledge.

Minifigures are still holding value well and cheap and easy to store and post, but you really need to pick the winners. Some do really well while others even in the same set don't. You have to know the subject matter very well and risk whether they do an obscure but loved character again. It is amazing how some Ninjago figures have rocketed in price. Unfortunately the ones that do well tend to be the ones in expensive sets. If you can buy sets, remove the more unique figures, and sell the rest of the set for close to what you paid for it then that is a good investment. Cheap and unique figures that had negligible costs and easy to store. But that rarely happens these days. And is a lot of work to know which ones to target.

Stuff I sell off that does really well tends to be stuff that they don't make any more so has little competition. None of that was planned as such. I bought stuff I enjoyed more than through any investment analysis. I would have been happy enough to open up my "spare" sets if the market bottomed out. LOTR figures and sets do really well. Superheroes sets of similar size from the same era do terrible in comparison. I still have some sealed superheroes sets that I could probably sell for RRP but not much more. Collectable Minifigures from the first ten or so (and definitely from the first three) series continue to do well but of course too late to buy them. Whereas newer series, I wouldn't invest in those (and haven't since probably series 8) as investors learnt to buy boxes and sell them in their 100s. Individual ones may be values, but not blind ones from the boxes.

Star Wars Planets also sell well, presumably as they have no competition from other similar Star Wars sets. Whereas I wouldn't invest in a minifigure scale X-wing or landspeeder, as they will be done again and better.

I know a lot of people look towards the tree house as the next big thing and often compare it to the Old Fishing Store. Personally I don't see it. It has been out too long, at a time when LEGO has huge popularity and LEGO investment has grown so much that everyone knows to buy and store sets. No doubt you can make a little on it after retirement, but you'd make significantly more if you can find and buy just about any current decent set at 50% off RRP. Dumb luck rather than planned investment wins these days.

So I personally identified Brickheadz, Speed Champions and Architecture Skylines sets to be pretty good investments. Most of them tend to double or triple in price within two or three years at the most. Someone recommended I check Ebay sold listings and these seem to match up with BrickEconomy. Buying and selling old sets is one thing, but new sets seem relatively fine still. What am I not taking into account? I've even broken down all the fees associated with selling on Ebay that I'm aware of and I'm still able to estimate turn overs of $20+.

Maximus

Huw said:

Or, to paraphrase what @ccc said, it's more trouble than it's worth.

There are too many sets released nowadays, too many people hoping to get rich on the back of them, and the rate of improvement makes older sets obsolete much quicker so much less desirable in, say, 5 years.

The days of the  'Cafe Corner' phenomenon are over.

So are you saying you believe the bubble is about to burst?

Huw

It burst 15 years ago.

Maximus

Huw said:

It burst 15 years ago.

But it seems to me that many sets if you pick right end up double or triple their price after 2 or 3 years - at the most. Am I mistaken? Are there costs other than fees and shipping I'm just not thinking of? Or do you believe that while LEGO investing can still be profitable you're better off putting your money elsewhere.

560Heliport

I'm sure there are some sets that, if you pick right, might double or triple in value. But what about the ones that don't increase? Then you're stuck with storing it or selling at a loss.

madforLEGO

Like Huw said, the bubble burst about 15 years ago. There will be very few items that will have crazy increases like Cafe Corner and the original UCS Falcon, not when you have pro resellers with warehouses full of stuff. There is also a difference of someone trying to sell something at a price and it actually being bought at that price. That and I think Covid was planting some false hope over the past year.. Gone are the days where people (kids) are stuck inside with nothing to do due to lock downs. People are likely going to spend more vacationing than buying LEGO sets. Hey, Im sure you think it still sounds great, but I doubt anyone really factors in EVERYTHING that comes with selling items, whether its widgets, or LEGO.

Cost of item, cost of listing/selling said item (better list it accurately as well with good photos), cost of shipping (shipping boxes, shipping materials like packing peanuts..) remember the item has to get to the buyer in good condition (or condition you note in the listing) and there is getting to the shipper in time to ensure you cannot be left negative feedback for long shipping times.  Also fail on a good description, or shipping damage occurs, and you get a possibly beat up set box back and have to return the money to the buyer and sometimes have to pay for shipping back as well, per eBay. Also feedback, buyer satisfaction (and buyers that say 'Oops my kid bought it, I want my money back'). Remember sites can bounce you if you do not have good feedback (especially eBay and Bricklink), and eBay is always harder on the seller than the buyer.
Finally, taxes. If you are in the US, Uncle Sam will have a reporting form from eBay about what you sold over the past year and eBay will send you a 1099 to enter into your tax forms come beginning of the year. If you get a software or tax expert to help, that will cost you as well.

Finally like @560Heliport notes, not all of them will be winners, better be prepared to eat the loss or have a place to store them.

Now, if you see all of this and say, "I want to still do it.." Lots of luck.

MugenPower

Maximus said:

Huw said:

It burst 15 years ago.

But it seems to me that many sets if you pick right end up double or triple their price after 2 or 3 years - at the most. Am I mistaken? Are there costs other than fees and shipping I'm just not thinking of? Or do you believe that while LEGO investing can still be profitable you're better off putting your money elsewhere.

It really sounds like you're asking everyone here and in your other thread to help you build a business case so you can decide if all of this is worth it or not.  I think everyone's already been more than generous in providing you with insights and I bet that those who are seriously into flipping or reselling aren't going to divulge all the ins and outs of it for you.  At this point, you should just try it because, at the end of the day, only you can decide if it's worth it for yourself.

SumoLego

I hear cryptocurrency mining is lucrative.  I've got a mining rig next to my Beanie Baby and Precious Moments collections...

sweetness34

The best thing you can do for Lego investing is buy the new Delorian when it gets back in stock, figure out a way to get the flux capacitor to work. Than go back in time and buy some of the best retired sets at retail or even better on discount when LEGO used to do that. Go back to the future and sell all the sets for profit. 

For full disclosure don’t actually do this so you don’t mess up the space-time continuum. 

CCC

Whether the bubble has burst depends on how big you want the bubble to be. Getting 10x the paid price is unrealistic these days. Getting 2x or 3x is not if you pick the right ones. But then getting 1.2x is not uncommon. Also it is more like an over inflated football that keeps it shape when deflated than a bubble. There was no sudden burst, the decline in returns has been very slow and the prices haven't crashed to zero - you are unlikely to lose much (if you buy at a reasonable price). But you might be working for nothing.

daewoo

I would never consider Lego as an investment opportunity.  There are so many other places to put the money I invest....places which don't require that I dedicate myself to hours and hours of work.  I've already got a job and don't want another.

pxchris

I find that LEGO is a wonderful investment...
Investment to the betterment of my mental health and happiness.

PJ76uk

The only way I can see Lego as an investment is when I kick the bucket my wife and/or kids will be able to liquidate my collection, hopefully should be worth something then even if sold at used prices! 😂

Astrobricks

PJ76uk said:

The only way I can see Lego as an investment is when I kick the bucket my wife and/or kids will be able to liquidate my collection, hopefully should be worth something then even if sold at used prices! 😂

Another fantastic excuse for one’s SO - it’s life insurance!

Huw

Perhaps a better investment of one's time would be to establish a youtube channel or website that makes money for you,  if and when it becomes popular.

BooTheMightyHamster

Huw would tell you more, but he's off taking delivery of his latest supercar...

;o)

SumoLego

Cryptocurrency backed by LEGO futures!  And minor stakes in Funko Pops!, and vintage sneakers.  Those are excellent investment vehicles.

- No offering any investment advice-

MCNwakeboard

I used to sell regularly on eBay and certainly had some good returns but between the higher fees, shipping costs, and potential to be scammed it’s just not worth it to me any more at that level. I’m not opposed to buying extras at a good price but that’s become harder to find over the past 3 years. 

Sethro3

I will agree with others timing is way different now than 5 years ago vs 10-15 years ago. Sets are released in such high quantity and quality these days, there is going to be a high demand. But are you really going to buy every single large "adult" set to sit on. Most likely buying them at msrp on top of it all?

I recall years ago seeing tons of great deals at stores, then LEGO movie released and popularity surged and now I rarely see a good deal. That plus the neverending awesome sets they release. I'd think it will limit your choices/pay outs. But hey, it's your call. It's your money. Do what you feel comfortable doing.

I used to sell a little on ebay and it was a lot of work for the little I was doing and it really soured my enjoyment of the hobby since the only free time with LEGO I had was listing and selling. I didn't actually get to build or play with my kiddo. So it was pointless for my situation.

AJRDLawrence

I bought 4x Mandalorian Battlepacks for £6.50 each. I sold them on eBay at £12.98 each. I had £7.84 in eBay fees, and £17.80 just in postage costs - excluding packaging and time. After fees and postage alone (excluding packing and time) that works out to £6.57 per Battlepack, for a "profit" of 7 pence each, or £0.28 for all four. If we count time and packing, it's at a loss. AND I can't even claim the funds because there is some issue with the direct debit going to my joint bank account (I don't have a solo account). 

The only good thing to come of it really is I should end up with a few more positive feedbacks and I have redistributed the sets to people who actually want them and may not have bene able to find the retired set in their local store. 

I'm sure some sets will net more of a return, but as the saying goes, don't play with anything you are not prepared to lose.

Shropshire

For a small set with low profit it can be best where can to wait and list it on a 70%/80% off fees event (must be single item listings not multiple quantity). that would reduce the fees by 70% or 80% to around £2.29 (if using 70% off plus fixed 30p fee)

Likewise for a battlepack sized set i'd expect postage as a 'small parcel' to be £2.82 (inpost) £2.98 (Evry) £2.85 (Royal Mail bought online) per item.

With this profit would be about £3 per set

FireFox31

As the forum told me on this subject: Buy what you will or might use and enjoy. Sell it after you're done enjoying it or if you never got around to it. Don't bother buying to resell.

Personally, I consider potential resale value as a minor metric when choosing sets to buy, along with how much I'll enjoy them, price, size, etc. For instance, I'm ok spending more on Ideas than Super Heroes or generic City sets.

This is a great thread. Thanks to everyone who spent the time to reply.

CCC

Shropshire said:

For a small set with low profit it can be best where can to wait and list it on a 70%/80% off fees event (must be single item listings not multiple quantity). that would reduce the fees by 70% or 80% to around £2.29 (if using 70% off plus fixed 30p fee)

Likewise for a battlepack sized set i'd expect postage as a 'small parcel' to be £2.82 (inpost) £2.98 (Evry) £2.85 (Royal Mail bought online) per item.

With this profit would be about £3 per set

Yeah, 70/80% off events have been every two weeks for a long time now, and even paying at the post office would be 4x £3.35. It is a case of knowing your costs before setting prices.

When selling multiple battle packs, it can be more cost effective to open them and sell the minifigures (they go as large letter and are typically what people want) then sell all the parts as a single bulk lot, charging one lot of parcel postage.

AJRDLawrence

Royal Mail charged me 4x £4.45 each for second class signed for. I still have one Mandalorian Battlepack that was opened and unused which I have no immediate interest in, so I may give that suggestion a try.

CCC

AJRDLawrence said:

Royal Mail charged me 4x £4.45 each for second class signed for. I still have one Mandalorian Battlepack that was opened and unused which I have no immediate interest in, so I may give that suggestion a try.

You don't need signed for on a cheap parcel.  You get free delivery confirmation on parcels anyway.

Lobot

AJRDLawrence said:

Royal Mail charged me 4x £4.45 each for second class signed for.

Standard Second Class Small Parcel includes insurance for £20 and costs £3.35 (or £2.85 online); each item is tracked so you can confirm it's been delivered.  I haven't had any problems with it, so it might be an option if you're selling relatively low value items.