bootstrap lesson

So I wanted to share a story about people down on their luck, out of options and needing a kick out of inaction.

 

This story started about a month ago, when a good friend of the family came to me needing cash to pay his mortgage. He has had a particularly rough couple of years, but really bad couple of months. I told him that I could give him the money for his mortgage, but that I wanted to know when he could pay it back. That was a trick question, of course, because everybody knows that when you lend family members money you never get it back. Fortunately he didn’t commit to anything, and I asked him what he was going to do next month. The guy is pretty bright, he’s just had a string of bad luck- some of it self inflicted.

 

Anyway, I said- how about this. How about instead of paying your mortgage, why don’t I show you something that could make money? He was, of course, very focused on paying his bills and insisted that he just needed a little more time to look for a job. I think he thought I was going to pitch him an MLM deal. He’s just the kind of guy who has always worked in a cube, flew just low enough under the radar to stay employed and hasn’t ever really taken initiative.

 

So, I finally convinced him that paying his mortgage is not going to be something that happens automatically in this “new economy” and I told him that I was going to show him something that would make him $20K a month if he’s listen to me. Job options are bleak. He (obviously) didn’t believe me. The deal was: I’d pay his mortgage if he’d spend 4 hours a day with me, and he’d be open to doing things differently.

 

So for that past 30 days, I put up a white board in my office at home, where I work most days. I wrote $500 in each of the 30 days on the calendar. He couldn’t go home until I wiped off the $500.

 

Each day, I put him on Craig’s list with $5000 in cash (his mortgage amount) on the desk. His job was to hit refresh and search for key items like ipods, computers, old cars, boats, jet skiis, trucks, smart phones, and laptops. Things of this nature. I sent him out and made him pick the stuff up, and lowball the people when he got there. When he had bought enough “product” he got to go home.

 

I’d re-list the stuff right back on Craig’s list or eBay for him. Sure enough, we started selling $500-1000 a day worth of product. I don’t think he ever stopped to calculate how much more we were selling.

 

When the month was over, he had taken that $5000 in cash and turned it into a real number. He made about $17K. Short of our goal by about $3000. I paid his mortgage with it, and I think he anticipated that I was going to give him the rest of the money.

 

:-) Nyet, comrade this is not capitalism for you; this is a lesson.

 

Instead, we went down to the bank and started up a business account with both of our names on it. I think he believes last month was some kind of fluke, but hopefully he’ll show back up and keep at it. He’s never made $15K a month in his life. He has a stunned, but hopeful look on his face now.

 

I think that people sometimes have to be shoved in the water when you want them to drink. This is a smart guy that just needed to be reminded that he is capable of doing some cool things with just a little bit of cash. Made me proud to be able to help. Sustainable? I’m unsure. We shall see. I would be lying if I didn't say I wasn't just a little bit shocked, myself.

 

 

 

 

Very cool, Joe. You sound like a good guy willing to help people make money for themselves.

 

I'm in a bit of a transition stage myself. Almost done with college and looking out on the horizon for where I want to take myself. The thought of "flying under the radar in a cubicle" sounds like hell to me - I'd rather get out and swing and miss 5000 times if that meant being my own boss and having limitless potential. Just trying to figure out what fields and how to get started, then I'll start swinging.

 

Thanks for the story.

Its sad that so many people are satisfied with a mediocre job in a cubicle with no real motivation to achieve better results. Im happy you made him apply himself instead of handing over the cash.

 

I would feel very uncomfortable asking a family member to bail me out...

nice job, I am a really big believer in this type of help; give a man a fish you feed his family that night, teach him to fish, he'll feed his family for a lifetime.

most people would rather in wallow in mediocrity than push for the bounds of their limits.

 

This was great of you to do.

 

Whats that saying?

Good story. Good food for thought.

 

Thanks!

most people would rather in wallow in mediocrity than push for the bounds of their limits.

 

This was great of you to do.

 

Whats that saying?

 

No good deed goes ......

 

 

Brilliant story! you're a good man, Joe.

Great Job Joe! You will be blessed for your contributions one way or another!

 

great story! Anything is possible if you set your mind to it.

Great job Joe!

Very good of you Joe.

 

 

I am kind of in the same boat. I have been selling on ebay for what used to be "mad money" for about 12 years now. But for the last year and a half it's been about survival to some extend. It can work. I just can't seem to make enough to reinvest a whole lot back. But I will (hopefully) just got to keep pressing forward.

Very good of you Joe.

 

 

I am kind of in the same boat. I have been selling on ebay for what used to be "mad money" for about 12 years now. But for the last year and a half it's been about survival to some extend. It can work. I just can't seem to make enough to reinvest a whole lot back. But I will (hopefully) just got to keep pressing forward.

 

Screw eBay. Get out. Seriously, you need to use eBay as a billboard- nothing else. It's the absolute worst marketplace. It's a great highway, you just need to pick the right position and placement for your billboards. I shut down my eBay business that was doing 2.5m a year in top line. We traced the problems to two things 1) The one-way feedback policy (Seller can only leave positive for a buyer) and 2) The persistent changes to infrastructure on the back end. I was paying $250K a year to maintain integrity with eBay's back end.

 

If you look closely, the only people left on eBay doing any kind of volume are selling cheap, crappy chinese products or charities, that pay no fees.

 

They need to liquidate the company and auction off the URL. That would be the best thing in the world for eBay to do for it's shareholders.

 

No good deed goes ......

 

This.

 

Good work Joe, hopefully he will commit!

Screw eBay. Get out. Seriously, you need to use eBay as a billboard- nothing else. It's the absolute worst marketplace. It's a great highway, you just need to pick the right position and placement for your billboards. I shut down my eBay business that was doing 2.5m a year in top line. We traced the problems to two things 1) The one-way feedback policy (Seller can only leave positive for a buyer) and 2) The persistent changes to infrastructure on the back end. I was paying $250K a year to maintain integrity with eBay's back end.

 

If you look closely, the only people left on eBay doing any kind of volume are selling cheap, crappy chinese products or charities, that pay no fees.

 

They need to liquidate the company and auction off the URL. That would be the best thing in the world for eBay to do for it's shareholders.

 

 

Sometimes I can't see the forest for the trees.

Screw eBay. Get out. Seriously, you need to use eBay as a billboard- nothing else. It's the absolute worst marketplace. It's a great highway, you just need to pick the right position and placement for your billboards. I shut down my eBay business that was doing 2.5m a year in top line. We traced the problems to two things 1) The one-way feedback policy (Seller can only leave positive for a buyer) and 2) The persistent changes to infrastructure on the back end. I was paying $250K a year to maintain integrity with eBay's back end.

 

If you look closely, the only people left on eBay doing any kind of volume are selling cheap, crappy chinese products or charities, that pay no fees.

 

They need to liquidate the company and auction off the URL. That would be the best thing in the world for eBay to do for it's shareholders.

 

Joe, I'm trying to get my Mom setup to sell all of her antiques, old stamp collections/valuables from multiple family estates over the years (she has a house full of it). Ebay has been okay, but again the fees are a bit of a problem. In some of the stuff she is selling, she is the only one in the marketplace - (old luggage stickers from the 20s for example).

 

The CraigsList thing is a great market place, but obviously security is/has been an issue. I'm more in the electronics/music equipment side, looking to make some $ off selling old equipment, buying stuff at low cost because I know true value of it (or think I do). But then again, I'm also armed when doing face-to-face transactions.

 

Any advice would be greatly appreciated.

Isn't the risk high?

 

I mean, what if you go out and buy $5000 worth of stuff one day and then you can't sell it all? Wouldn't you very quickly fill your house with tons of crap?

 

I guess it depends on how cheap you bought stuff? What was your cost to sell ratio? 50% profit? 10% profit?

 

What items were the easiest to sell?

Isn't the risk high?

 

I mean, what if you go out and buy $5000 worth of stuff one day and then you can't sell it all? Wouldn't you very quickly fill your house with tons of crap?

 

I guess it depends on how cheap you bought stuff? What was your cost to sell ratio? 50% profit? 10% profit?

 

What items were the easiest to sell?

 

I don't have an equation for margin. Never wrapped a business plan around it. Generally though, I'm trying to double my money on anything under $100 and I'm at 30% on anything over $1000. But if I can buy a Bose system for $1000 and sell it for $1200 in one day, I'm going to do it....

 

No, you just have to know where the vibrant niches in the marketplace are. I just put this together yesterday for Steve, and I have no problem sharing it with everybody.

 

 

I've highlighted the exact products that have done the best for us, but that may or may not be the case for you over in Tuscaloosa. No idea. I'd carefully consider ignoring what works well for us. I've made money on every one of these categories, consistently.

 

1. $5000 and under passenger cars

2. Motorcycles of every price

3. Recreation vehicles (Jet skiis, boats, RVs, travel trailers)

4. Bicycles of every type, especially high-end offroad and onroad cycles

5. Oakley and other brand high-end sunglasses

6. Women's purses (ultra-highend only, Prada Gucci, etc)

7. Time Shares, low-end only

8. Land (acreage only, no houses)

9. Rims and Tires

10. Laptops (current models only)

11. iPhones, iPads, and all other Apple branded products

12. Flat televisions

13. Guns

14. Safes

15. Broken Gold, silver flatware

16. Consoles (Xbox, Playstations, etc) and video games

17. High-end furniture in excellent condition

18. Trailer, car haulers

19. Car accessories, model specific (Think :BMW 328 hard top, or Lamborghini Glass bonnet, but not "wheels that fit any year Ford"

20. Bose sound equipment (any year, this stuff is hot)

21. Rolex and lambda lambda lambda and the omega mu watches

22. Legos

23. Products that are industrial or highly technical in nature, with limited scope of users.

24. Generators, gas and LP powered

25. Businesses that are going out of business

26. Diamonds *be careful*

27. Ultra-high end appliances (new price of $2000+)

28. Forklifts

29. Collectibles (the weirder, the wackier, the better)

30. Dirt-dirt-dirt cheap event tickets (10% or less of the face value)

 

That' a fine place to start right there. Very easy to get in and out of all of those products. Your mileage may vary, and I would suspect that there are geographic differences that generate anomalies in specific markets. (For example, there's zero market for snow blowers in Austin, and there's no use for swamp coolers in Hawaii)

 

 

 

 

I've been toying with this same idea, but adding in house financing at a high % rate. I think there is even more money in the finance charge but I dont have a solid answer on the legality. Any thoughts?

I've been toying with this same idea, but adding in house financing at a high % rate. I think there is even more money in the finance charge but I dont have a solid answer on the legality. Any thoughts?

 

Each state is going to vary, on the laws. That is major capital intensive though, and in this environment, I would not recommend collecting on bad notes. People are at the end of their proverbial ropes, and out of options. I'd suggest staying out of that, unless you've got a helluva fire wall and a bucket of cash. Right now the average foreclosure to REO is at 19.5 months. When the banks all finally admit how much REO they've got on the books, the S is gonna HTF.

 

I've got about 40 paying notes out there, and I'd sell them for 50 cents on the asset dollar right now.

 

 

Thanks for the insight into what you do Joebiz. I just made a low ball offer on a "1. $5000 and under passenger car" to get started

I've been thinking I could make a decent living doing something similar. I've flipped some nice profits (mostly car parts) but I think it might turn into a grind after a while. Cheers for the info.

 

What are the income tax implications?

I've been thinking I could make a decent living doing something similar. I've flipped some nice profits (mostly car parts) but I think it might turn into a grind after a while. Cheers for the info.

 

What are the income tax implications?

 

It's no different than any other business. On a personal income tax level, I'd think that you would want to very quickly incorporate and cover your bases. I operate under an S-corp in Texas. Key is tight operational controls and cash controls.

 

A grind? Maybe. I guess it depends on what else you could be doing. If you're sitting around playing Xbox, then you've got a pretty low opportunity cost.

 

 

 

--joe

 

 

Could be a good opportunity. I'm in Houston and have furniture in my garage I would be willing to give away if someone wants to come get it. I'm thinking of putting it up on Craiglist.

 

I have:

 

Wood bed frame set

 

Matching dresser

 

Couch

 

Loveseat with ottoman.

 

Also have coffee table and end tables (no glass)

 

 

 

ALL FREE TO ANYONE WHO WILL COME GET IT!!

 

I don't know what it's worth, but could probably at least get $100 bill for it to someone who's willing to attempt to sell it.

What the heck happened to the rest of this thread!?

I don't know about all of you but I'm going to work at Joe's house starting tomorrow morning.