I bought a fancypants camera right before Christmas in 2014.
For my wife, of course (you can see where this is going, right?)
My wife had been talking about how she wanted a better camera for capturing our daughter, so I did the gentlemanly thing and bought her a Nikon D7000 from BestBuy. It was an AMAZING deal – $650 blowout (including tax), with a nice 18-140mm kit lens and camera bag and fast 16 gb memory card.
“That’s for you. I’ll never use it,” she says. How insulting!
She almost never uses it. Meanwhile put 10,000 clicks on it in the first year. Sigh. I hate it when she’s right.
But to be fair, she’s gotten a bunch of mileage out of it, reminding me how this wasn’t a very frugal purchase for someone who wants to retire early.
In the 11 months post purchase, I acquired five more lenses, two tripods, two camera backpacks (still haven’t found one I like), various filters, and a host of various paraphernalia. Total outlay, including the original camera purchase? $650.
That’s right, I’ve acquired a bunch of nice equipment (after the original purchase) for the low cost of zero. But what about that $650? Yeah, that probably wasn’t the best use of funds. But this has been a great artistic outlet for me, and this splurge has provided great value for me and the family.
You see, I can afford to maintain (and expand) an expensive hobby through arbitrage – buying low and selling high. I look for people selling a large lot of camera gear. Typically these people don’t want to be bothered with parceling out the gear into separate pieces. This means that they sell cheaper than they could if they put in a little more time and effort into selling pieces individually. I swoop in and sell the pieces through channels where I am guaranteed to sell quickly, and for close to top dollar (with no seller fees).
Here are some examples:
My first lot: I bought some vintage equipment for $140 off of craigslist from a gentleman selling off his mother’s equipment. The camera bodies went immediately to Adorama for $140, leaving me even. I intended to keep two lenses, but I found that manual focus ain’t for me. I sold those two great lenses on eBay for a net profit of $160. Kept a tripod, and donated some other items for a tax write-off.
Lessons learned from my first purchase: I should have tried selling my equipment on Facebook first – there are multiple buy/sell markets exclusively for Nikon gear. I probably would have made about $100 more. What’s your niche? You’ll probably find a marketplace there.
Next five lots: Mostly purchased through craigslist, but I found some good deals from desperate sellers on the Nikon buy/sell Facebook page. I sold some equipment on Amazon, some on the Nikon page, and resold some of the items, parceled out, on Cragislist. Thus far, including the first lot, I’ve spent $140+975+800+150+50+225 = $2,340. Sold items for $300+800+1200+40 = $2340. Break even, baby, AND I have five more lenses (total value: $2000+), two camera bags, two nice tripods (one is $350+ new), and various paraphernalia. It would have cost me way over $3,000 to buy this stuff new, and probably over $2,000 buying individual items used.
And I should mention that one of the lots was a dud (I didn’t inspect the equipment carefully), so it will be more of a tax write off than a profit center. Lesson learned.
But I’m still ahead.
Maybe not with the wife (who freaks out every time I buy a lot, especially the $975 one), but she is learning to trust me. Gradually.
So, how does this apply to you?
Perhaps you have a passion, but have been holding back because it costs a decent amount of money to get in the game. If you know the market, perhaps you can you use that knowledge to engage in some arbitrage. Acquire the equipment that you need and perhaps even make some money in your free time. Keep the items you want to continue the hobby, or perhaps just buying and selling everything in order to generate side income.
If you do want to engage in some arbitrage, IN AN AREA YOU KNOW, here’s where you can start looking:
- Craigslist – well, Craigslist Pro went bye bye. Still a good place to find things, but you won’t be able to get a jump on anyone. Unless there is an app that I don’t know about yet (recommendations in the comments, please!)
get Craigslist Pro on your cell phone ($2!) and set up alerts for items you are looking for. Include common misspellings. This is a great passive method that alerts you on your phone as soon as something that matches your search term pops up. This is an ESSENTIAL item for not only the arbitrage person but also if you want to get good stuff on the cheap. I’ve gotten so many ridiculous deals because I have this app and am the first one to respond to a new craigslist ad ($350 in lenses for $150; an A/V receiver with five speakers for $25, etc.)
- Facebook – look for buy/sell marketplaces for your niche. Even regular Facebook marketplace might work out well. Heck, I think I’ve had much better luck on Facebook as of late for both buying AND selling. And that’s with the local Marketplace.
Typically better for selling, but if you are a little active you can often find good deals for folks who just need to sell something today.
- Local online auctions. Many universities have these. My local university puts dozens of items online everyday. If you are careful, and know what you are looking for, there is a mint to be made here.
Where should I sell?
- Craigslist – it’s free. Parcel out that lot and put up individual items. Note: Doesn’t seem to be as great as it used to be, at least not in our sleepy little college town.
- eBay – not free, but can be a good place to sell, especially if you are OK with pricing a bit lower than the competition to sell fast.
- Facebook – that buy/sell marketplace (for me, it’s Nikon equipment). And now the local Marketplace! So much luck here!
- A specialty store (for instance, Adorama and B&H buy camera equipment) – typically not the rest return on the dollar, but if you need/want to turn some equipment around quickly, then these stores can help you.
Remember, the key here is to know your market, and know what you are buying and selling. Don’t start buying and selling camera equipment just because you saw it here and realize that you can make some good money. You’d better know something about what you are doing, or you will get burned. I’ve turned down multiple lots that I’ve looked at when I realized that the ability to make money wasn’t there – but that’s because I know my market and I did my research. And if I can’t figure out if something is worth it, I leave it alone.
So don’t despair! Moving towards financial independence and early retirement doesn’t mean that you have to give up on an expensive hobby. It just means that you need to be smart about it. Recognize that it is easy to get in the hole with the hobby, and plan accordingly.
Besides, if you get really good at the hobby, perhaps this hobby could earn you some side income in retirement.
Do you have an expensive hobby whose costs you manage through arbitrage? Do you have extensive knowledge in a field that would allow you to engage in arbitrage? I want to hear about it.