Archive for the ‘Money Making Hobbies’ Category
How I Used To Make Lots on eBay
My Inspiring eBay Story
If anyone wants to take a crack at starting a business, the best way to learn is by starting out on eBay. Gather together some old junk you no longer have a use for and sell it to someone else. Soon you are generating income and dealing with customers, also known as running your own business. It’s certainly not as easy as you would think.
I sold off a lot of items back in 2006, to pay for a mountain climbing trip I had taken. I had purchased those items on a credit card and was horrified at the financial situation I found myself in. Before long, I had maxed my credit limit and was being charged enormous interest rates.
What To Sell?
I found eBay was a way of recouping a lot of quick money and it taught me to become an entrepreneur in the process. I bought a few books that described some unique ways of generating more income. Even after I sold all of my mountaineering gear, I was finding other items to sell. I continued on with selling, for almost a full year. After all of my junk was cleaned out, I began to explore garage sales, retail stores, and trash cans. I couldn’t find many profitable items at most rummage sales and it became time consuming. That’s when I learned to explore large retail stores and college dumpsters. When the semester ended at my university, the amount of perfectly good items being thrown away horrified me. I would rescue aquariums, books, and furniture throughout the weekend. Soon the game was scarce and I moved onto stores like Walmart and Target.
The Days Of Easy Money Are Gone
At first I was selling clothing items and sporting goods but eventually I moved into other areas. If you look around, while shopping, you will occasionally find clearance racks that need to be purged immediately. Stores can cut prices by as much as 80%, to make way for new inventory. I would research the going rate on eBay, compared to the price at the store. If there was room for profit, also known as arbitrage, I would purchase as many items as I could.
The only sellers that do any good any more are the volume sellers, maybe they cut thier own deals. Figure every $10 out of 100 is gone to fees for regular folks. -Anonymous Poster on eBay Forums
You would think that there wouldn’t be many opportunities for profit doing this and you would be wrong. On the contrary, I made a lot of money that year flipping items. A few of my favorite scores would happen during season changes. For example, spring is upon us, which means somewhere out there, winter coats are being flushed out of inventory. These could be purchased for pennies on the dollar and then sold next year, on eBay, when the item is in demand.
I once bought an entire clearance rack at 80% off, during a trip to a local Gander Mountain. The lot cost me close to $800 and I resold it for $1400 later that week. I also found an HD DVD player once that was a display item at a local Shopko. They were asking $23 for it and I sold it on eBay for $145. I couldn’t believe how easy it was to make money between 2006-2007.
Pop Went The Housing Bubble
In hindsight, it should all make sense now. We just saw the biggest credit bubble in the history of the world, turn to a pandemic of spending. People were using their houses as ATMs, to purchase junk they didn’t need. I was only 23 years old at the time and attending college. The lessons I learned from the overall experience far outweigh what I learned at school. Those days are long since over and likely won’t return for many years. I was definitely striking the iron while it was hot. You would be hard pressed to find such blatant arbitrage deals today.
While the deals were harder to come by, the eBay fees and rules started to take their toll. It became much more cost prohibitive to run a business through eBay, so I closed my doors to my entrepreneurship. I look back on those days as good times but severely unrealistic. The overall attitude in the country has changed from making money to saving money. This is not the type of economy in which to become a seller. For this reason, I believe people will find it more difficult to make an easy living as before, solely using eBay as a means to generate income.
Prosper Marketplace Lending
Live Long and Prosper
I have mentioned Prosper before in another article. It jumps into my mind again, because of all the recent controversy. I have received numerous emails and have been slugging it out with some of the anti-prosper websites for sometime now. For those who don’t know, Prosper is a micro lending marketplace where borrowers and lenders can come together and do business.
Instead of borrowing from a bank, the idea is to borrow from your peers. This insures that you get a better interest rate than what you would normally be charged by a bank. Borrowers feel more obligated to give back money they borrowed from other people. If you default, instead of sticking it to the evil bankers, you essentially are stealing money from another average Joe. Lenders on the other hand get a more competitive interest rate than a savings account or FDIC insured CD. If you are really good, you can even beat equity markets like the S&P 500.
So What’s The Problem?
For the last year and a half, I have been making around a 10% interest rate through Prosper. I have a variety of loans to choose from, as a lender. I have decided to go with Prosper’s A and AA loans which are the highest rated. While the interest rates are lower, the loans themselves are less risky. They still yield more than most other investment ventures. Here’s where the problem lies, others are far too greedy. Many of the borrowers over on prospers.org (an anti-prosper site) are crying foul and screaming for government intervention. They feel Prosper isn’t providing enough information about it’s borrowers.
Perhaps the problem may like with chasing 25% interest rates from borrowers who have several delinquencies on their credit reports already. Then again maybe it’s the fact they look too closely at a person’s personal information, rather than the brass tacks of their borrowing statistics. Prosper lays it all out for it’s lenders. I have all the information I need, to make an informed decision about lending or not. Maybe some of the lenders have to remember when most of these loans were created. Prosper has been hosting it’s marketplace for just a few years, right as the housing bubble began to reach critical levels. When the mother of all market bears knocked on our door, it wasn’t like most of these borrowers were going to keep making payments unscathed. When it rains, people get wet.
The Nightmare Scenario
I had a curious individual send me an email the other day, asking what do do with their savings. They felt, like me, they had enough in their emergency savings account. They didn’t have the necessary $2000 minimum investment to throw down for a Roth IRA start-up over at VanGuard or TD Ameritrade. I mentioned Prosper in my reply and how great it was I only had to invest $25 at a time. That’s when they informed me they had heard of Prosper and that it was close to bankruptcy. This isn’t the first time I have heard this argument.
I’ve looked at the SEC documents outlining the cracks in Prosper’s foundation. The SEC made it widely known in it’s report, they were trying to prevent such a catastrophe from occurring. They outlined how vulnerable Prosper’s lenders were to a possible liquidity problem by Prosper itself. Furthermore logic would dictate that some sort of arrangement would have to be made by a third party, to negotiate the continuous flow of money in this case. It’s not like all those borrowers are going to owe nothing, if and when Prosper does go bankrupt. If that’s the case, put me on board for a $25,000 loan.
Still A Great Lending Tool
While I continue watching the equity markets stagnate and interest rates on savings dive into the abyss, I’ve been vamping up my Prosper lending. I live by one rule with Prosper, the second I have a default, I am all done. For over 18 months that has not happened. In fact I have been pleasantly surprised by my returns. Sure I have an occasional late payment, as noted in my screen shot below. My borrowers are late on payments from time to time and I have grown accustomed to their tardiness. However my track record speaks for itself. I still have a great vehicle to make money and have been beating some of the hedge fund managers out there, for over the past two years.
Statistical Analysis
I have included an overview which you can enlarge, by clicking on the image until it expands. As you can see most of my loans are current, with one that has recently gone late (now current as of this morning). I’ve include some advanced statistics from a third party website known as Eric’s Credit Community. You can view the advanced statistics from my loans by going here. As I mentioned before, it estimates my return to be close to 10%. Truly, it doesn’t get better than this as far as investments go. Especially in the dark economic days we find ourselves in now. If you haven’t heard of Prosper, you should check it out. Just use caution and take the naysayers, warnings of doom, with a grain of salt.
