Starting Coin Business ***Update in OP***
gene1978
Posts: 772 ✭✭✭
Can a part time collector/pocket dealer make $50K a year on buying a selling coins?
Just looking for people thoughts. I looking at turning my hobby into a side hustle.
****UPDATE***
I started to keep track of my buying and selling of coins and coin related items. So to date I have Gross Sales of $37,025.07 with a net profit of $1,381.32.
My biggest issue if finding inventory and expanding my customer base. I have two great customers that buy silver from me a lot but that one item that
my margin on is not high. It seems bulk wheat pennies is what I make the highest profit on, typically my net profit percentage on these are 30 to 40% on
average but one again it hard to find this in bulk at a great price. I have sold on eBay, Facebook, Crigslist, and Local free AD paper. Not for sure if I am going
to continue it as business or just buy stuff I like to collect. I am also looking into adding sports cards to help also that something I was into years ago.
My Ebay Auctions
Comments
only if they are good.
BHNC #203
Nearly impossible. Margins on coins are typically 10% (or less on bullion). [Yes, yes, you can occasionally cherry pick someone.] To make $50k, you need to buy/sell $500k per year. This is hard to do, very hard on a part-time basis. And the faster you are trying to flip, the lower your margin.
1st thing you have to ask yourself: where are you getting your material? If you aren't travelling to shows virtually every weekend, you need to have a B&M presence or be running ads. If you are running ads, you need to be available to meet with people, most of whom will be selling you low value crap.
If you are buying from dealers/auctions, who are you selling to? You need to have a way to place material that gets you greater value than the person you are buying from.
You need to be nearly full-time to even approach that kind of volume and profit.
In my humble opinion - as a part-time dealer.
I would also suggest it is easier to be a dealer if you stop being a collector. The problem with collector/dealers is that you may overvalue material because of your emotional attachment to coins. You also will have a tendency to want to keep just the kind of nice coins that you need to be flipping to generate income. I mean, it's fine to do both if you aren't trying to generate a full income ($50k is most people's hustle not their side-hustle).
Probably no. Where do you plan to get your stock from? Do you have a reliable source?
Wow... that would be pretty good to do as a part time dealer. As stated above, you would need really great stock and equally great sources.... Best of luck, Cheers, RickO
It could be done years ago if you developed a base of customers that includes dealers and collectors, AND you had access to a lot of good material. When I was a dealer a fair amount of my business with other dealers. A group of them would often flock to my table when I set up at a show. I ended up having to give numbers to them because some were upset if they didn’t get “first crack.” I did a lot of want list work for customers.
Now, I’m not so sure you can do that because it seems that most of the good material is going to the auctions and not the bourse floor. The bourse and shop dealers, from whom I acquired most of my material, don’t seem to have the volume of “good stuff” like they used to have. You make on many on “good stuff” which is properly graded with good to great eye appeal.
N O. The TPGS's have leveled the playing field too much. Perhaps if you specialize and become the "top dog" in a particular coin series.
Work Hard, Know your series or specialty, Eye Appeal is paramount, Must know pricing, Be Honest, and IMO high end Photography is one of the more important aspects to make this work.
Best answer.
@jmlanzaf makes a good point.
You need to be able to separate the collector that's in you from the businessman you wish to become.
You cannot keep the nice coins for yourself; those must be sold to churn your money.
I think you need to focus on coins you can make more than 10% on though.
Those margins only make sense for the whale dealers,and don't suit your business model.
It helps to have in depth knowledge of a series or of a niche; for example: cameo proofs, toned copper, FS Jeffersons, striking errors, etc.
In most cases a small-time dealer can't compete with the big guy selling 65 Morgans, $20 Libs, Walkers....
You will need to turn your money fast and won't be able to carry a large inventory like the big dealers.....but also you won't be able to tie up your money in TPG submissions.....but then again, you will need the occasional supergrade coin to come back to make your sales....so you may be like a dog chasing your tail....
Can it be done?
Yes.
Will you work your tail off?
Yes.
Is it likely to meet your goals?
Maybe not.
You won't know till you try.
I made almost 40k profit my first 6 months in business....this was pre-internet and, yes, I was rarely home, and worked harder than hell.
I loved it though and wished I would have made the decision sooner.
Purchase a two million dollar coin and then flip it for two million and fifty thousand dollars.
Possibly !!!
That is a very hard question to answer. If you are good, knowledgeable, have a good source of coins, a good amount of buyers, the market is good, etc. then maybe. It all depends on too many factors to count.
YN Member of the ANA, ANS, NBS, EAC, C4, MCA, PNNA, CSNS, ILNA, TEC, and more!
Always buying numismatic literature and sample slabs.
Only playing with the biggest boys and girls.
I imagine some people could..... most people can't. Depends on what sort of personality, organization, and expertise you bring to the table. I'm absolutely no good at being a salesman. Some people are born with it. As others have said, finding coins to sell is a big obstacle to breaking into a market.
I always figured there are two ways (figuratively speaking) to make a million dollars: sell a million items at a dollar profit each, or sell one item at a million dollars profit. It all ends up the same, only the work to get there is different.
Making 50K might be easy, impossible, or somewhere in between. It all depends on what you are selling.
Another idea, as someone alluded to, would be to act as a scout or broker for specific items. Some people don't have the time or the patience to scrutinize every source or eBay auction to get what they are looking for.
Grossing $50K or netting $50K? BIG difference.
MY COINS FOR SALE AT https://www.pcgs.com/setregistry/collectors-showcase/other/bajjerfans-coins-sale/3876
Thanks for all of your comments. Most have confirmed the concerns that I have had. I think I will keep it as a hobby for now.
My Ebay Auctions
Difficult but not impossible. You would have to have about 10-20K to invest. You will need to turn that weekly with a 5% net profit.
Best place to buy !
Bronze Associate member
Yes.
And lose $9,450 after the Paypal fee.
Of course. Now, ask how many millions of dollars you'd need to invest to be able to net $50k. I expect it is a function of the amount of work you're willing to do. For example, if you have $20m in stock it might be possible to do it only a few hours per week.
Updated.
My Ebay Auctions
Your margins seem to low to only make 1381 on 37,000.
You make money on the buy side.
You can make 12% with no work by putting the same money in a stable mutual fund. However, if you gain in enjoyment and personal contacts, then 3% might be OK for you.
@ErrorsOnCoins I agree. I had a huge silver order from one of my customers that they wanted filled and I was only able to fill it at a profit rate of 2% profit rate. That customer it starting to buy other things right now that I make a higher profit margin on. I like to run at 20% to 30% margin but not for sure if the possible. Right now 85% of my sales are 90% silver. I am trying to expand what I buy, what I offer, and trying to get away from 90% silver.
My Ebay Auctions
That may be true, but he is referring to a quick flip. 12% in one week is different than 12% in one year.
Just assembling a nice collection is a lot of work. Plan on working your tail off to make a successful business as a coin dealer. Best wishes.
Don't forget that you'll be filing schedule C, which will tax your net profit at 12%, 22%, or 24% depending on your taxable income from other sources (higher if taxable income is over $157,500) Don't forget the additional Social Security self-employment tax of 15.3% that will be assessed on net profit (you have to pay the 7.65% you would pay on wages, plus the 7.65% an employer would pay on your wages). So, if you're in the 24% tax bracket (taxable income $82,501 - $157,500), your rate on the net profit from your coin business will be (24% + 15.3%) 39.3%.
Coinlearner, Ahrensdad, Nolawyer, RG, coinlieutenant, Yorkshireman, lordmarcovan, Soldi, masscrew, JimTyler, Relaxn, jclovescoins
Now listen boy, I'm tryin' to teach you sumthin' . . . . that ain't an optical illusion, it only looks like an optical illusion.
My mind reader refuses to charge me....
As with any new business, work like a dog for an extended period of time, and you can do it! Your customer base will grow over time. Good luck!
Dave
MS71, you seem to have a good grasp of taxes. Everthing you stated is true, but remember aggregate tax rate can be easily with a little tax planning.
I like this thread.
All of this is true but you do get more deductions than if filing it as a schedule C (likely by setting up an LLC) than you would as hobby income on line 21 of a 1040. Some allowable expenses you could deduct would be advertising if you put an ad in the local paper, vehicle expenses (kind of tricky but if it is a private vehicle not owned by the LLC you will need to keep track of personal mileage and business mileage along with a trip log). But if you use your vehicle 50/50% for personal and business then you can deduct half of your vehicle expenses. Grading fees, supply costs, and even travel costs if you go to a large show.
Honest dealers would take years to make significant profits, whether they are vest pock or brick store owners; of course the dishonest ones can make short term kills, especially if they are willing to do shady deals, but most of them run out of re-usable victims.
A dealers world and a collectors world are two different worlds.
Most have NO idea what dealers have in hidden cost and forms.
Start out by taking a table or two at some local coin shows to see how you do. That will get your name out there and let people get to know you, and whether or not you can buy and sell enough.
I found converting from a collector to dealer an easy transition once you get over the sadness of selling a favorite coin.
As to costs, watch those extremely carefully and know why you are spending the money.
You are barely beating the inflation rate. You could do much better in mutual funds or even risk free inflation adjusted government bonds.
Did you build business inventory during that time period?
Building a solid inventory is super important.
Flipping is also important, but IMO, building that superb inventory should be goal one.
Having the deductible expenses will help lower the taxes but those expenses are extra costs that cut into the profit margin. New part time dealers may not attribute all expenses to the business when they are incurred. If the lines between personal finances and and business finances are blurry the “profit margin” can actually be quite different.
My Ebay Store
Net profit of $1381?
How many hours of Work was it?
How many hassles? Any fun?
Liberty: Parent of Science & Industry
There is a lot of risk in a thinly capitalized market to be satisfied with a ~3% profit.
Assuming you are going to report the income you might as well have the deductions as opposed to having the expense without the deduction. Reporting it as line 21 hobby income won't allow him to deduct any expenses incurred other than the cost. Assuming he set up an LLC and reported it as schedule C income he could deduct the cost of packaging, postage, vehicle related expenses for going to the post office. Assuming he is profitable he can deduct all his expenses when incurred. If he is not then that's a different story.
I truly wish you success
Successful transactions with : MICHAELDIXON, Manorcourtman, Bochiman, bolivarshagnasty, AUandAG, onlyroosies, chumley, Weiss, jdimmick, BAJJERFAN, gene1978, TJM965, Smittys, GRANDAM, JTHawaii, mainejoe, softparade, derryb
Bad transactions with : nobody to date
This may not have anything to do with your question. However, I have a friend some 50 miles from here that we converse a lot about Morgan dollars. We have a coin store nearby that I am assuming has been there (Bozeman) for quite a while. However both of us have the same opinion/experience with the place. It seems the owner and long time manager is now letting his son-in-law run the business. The son-in-law is an absolute terrible salesman. I would not buy a toothbrush from him let alone a silver coin. Why let him run the shop is way beyond me especially when it is a business I spend many years building up. However, it is not my money.
ness finances are blurry the “profit margin” can actually be quite different.
You don't need to be an LLC to deduct expenses on Schedule C.
Fundamentally, the low margin end of the coin market is the thing that most general interest dealers face. Niche dealers might do better on margin, but it still becomes hard to find enough material to sell, especially if you don't have a valuable client list.
I do about $200,000 in annual sales with a net post tax income of $5k to $10k. Pretty typical. Works for me as a side hustle, scale up would be difficult. I tried it for 6 months between jobs once, very hard to find $2 million per year to buy.
Hobbyist is what your are. Don't forget that the Gov't needs FICA on sales (even if you are under the radar for taxes). Call it fun and keep buying but get a bit more picky on what you can make money on. Don't have to buy everything you see.
bob
I applaud you for taking the shot. I opened a coin store in 1980 while I was still a teenager. I had made a lot of money in rhe late 1970s selling a little mail order, setting up at local shows, and making the rounds to all the pawn shops and coin stores within a couple hundred miles. The expansion into the store was a failure and I lost everything I had made. Late 70s was a red hot market early 80s was a horrible market. I had money and knew coins but I knew nothing about running a business. I think the best way to become a coin dealer is work your way into it slowly. Try to make friends with other dealers and learn. Set up at local shows. If you stick with what you are doing and remain open minded the knowledge you gain will be extremely valuable. When I lost the shop my plan was to get some money and start another shop. I never did. I wound. Owning a company in a completely unrelated industry. But what I learned trading coins and failing in a coin store gave me the skills that I needed to build the business I have today. Just keep asking questions and adjusting your business model and things will work out.
big kudos for turning over 37,000 so far.
treat it like a job and you should do fine. lots of good advice already posted
I would suggest if you want to make fifty grand , that you start with five hundred grand. And good luck averaging 10%. The overhead eats me up.