Author Topic: 30 y/o seeks advice about selling a collection and starting a business  (Read 2489 times)

Fiveyearclub

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Hello!

I have:
- $68k in retirement
- $38k outside retirement
- $250k equity in a $350k condo (San Jose)
- $139k salary
- $0 non-mortgage debt
- $50k-$100k in about 800 yo-yos... (yeah... not the best decisions i've ever made...)

I was thinking I'd sprint to pay off the condo and then start my own business.  I'm 30, and I could have it paid off by my 32 birthday (12-18 months).  Obviously I could do it faster if I sold my yo-yos.  Monthly take home is about $7300 and monthly spending is about $2500 (not counting vacations, dmv reneweal, etc... will be $1400 if no mortgage)  I can save $48k-$60k from my job every year.  So the yo-yos represent about a year of working, and probably more like 6 years of living expenses 30 years from now.

The obvious thing would be to sell all the yo-yos and then either pay off the mortgage or invest and assume long term that does better than my 3.125% mortgage loan.

I really want to have a good 2-3 year runway to start a business, and low fixed costs so I can sustain it as early as possible.  I don't have any family or kids.  I've thought about maybe selling the condo and leaving the state.  If I did that, I could start a business now, although I'd have less of a nest egg.  And if the business fails, I'd kinda like to still have the house money in case I get a family.

What are your experiences / opinions?  Any place better than eBay to sell such a specific thing?  I've thought about just opening a shopify store, since I know the community and have a lot of (useless) knowledge about yo-yos.
« Last Edit: July 21, 2015, 03:43:54 PM by Fiveyearclub »

Chesterfield

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Questions: are you maxing your pre tax retirement savings?
What kind of business do you want to start?
eBay and PayPal take a percentage. Don't know about other options, but if there is some way to sell your yo-yos without paying about 10%, your yo yo collection is worth more ($5000 -$10,000 more). Is there a yo yo convention? Some other way to let yo yo collectors know what you have for sale?
Do you have a business plan?

Fiveyearclub

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Yes, right now I've maxed my Roth 401(k) for 2015 (just became available this year).  Will do pre-tax IRA before the end of the year.  About $50k of my $68k retirement is pre-tax, so I was thinking about delaying the mortgage paydown to pay the $15k tax required to convert the $50k to roth so that all $68k was Roth.  I have to do backdoor everything b/c of income level.

I want to start a *drum roll* financial education business :-).  I know eBay/Paypal take a large chunk, but they also provide a bunch of free marketing / efficient pricing.

There are plenty of online forums / Facebook groups where I can advertise.  Let's say it takes a year for the market to absorb $50k in yo-yos though... given that I can earn $100/hour consulting, I wasn't sure if it was actually worth it for me to spend all that time marketing / posting / describing 800 yo-yos rather than just working some nights and weekends outside my full time job (although... I really don't enjoy doing that at all).

I know what my fixed costs are.  The materials are basically free to produce, since I'd be doing it all in house w/ equipment that adds up to less than $5k.  Then the question is just can I make a mix of free and $5, $20, $100 content engaging enough that people will buy it.  Not sure a detailed business plan can help me much w/ that question.  I could certainly flesh out my marketing channels and their associated costs more.

I know it could take 5 years to build up an audience large enough to match my full time salary, and given that I'll live on 20% of my income after the mortgage is paid off, another option is just working for another 5-10 years... because at that point I'll be FI (albeit, modestly).
« Last Edit: July 21, 2015, 03:48:36 PM by Fiveyearclub »

Roots&Wings

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Any place better than eBay to sell such a specific thing?  I've thought about just opening a shopify store, since I know the community and have a lot of (useless) knowledge about yo-yos.

Possibly an auction or dealer that specializes in toys like yo-yos. If you are a yo-yo collector/expert, you likely know this market best. Who are the buyers and current sellers for these? How much time do you want to invest in selling them yourself vs. selling via auction house or dealer?

I also have a specialized (non-yo-yo) collection and the best market for me to sell is via established dealers who are respected experts and command top dollar. eBay is where I found my steals :) I tried reselling on eBay and wasn't worth it for the low price realized or time invested; the time spent networking with dealers/experts yielded better results.

Good luck and keep us posted!

Fiveyearclub

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2ish year update.  I'm 32 now.  Yay!  Still alive.

I have:
- $105k in retirement[+54%]
- $40.5k outside retirement [+6.6%]
- $354k equity in a $400k condo [+41.6%]
- $152k salary (last year was $169k) [+15.5%]
- $0 non-mortgage debt
- $50k-$100k in about 800 yo-yos... (yo-yos are stilll cool but I'm still crazy for buying them)

No progress on selling any yo-yos (but I did buy one of the rarest / best... http://www.yoyomuseum.com/museum_view.php?action=profiles&subaction=turboyo).  The last six months or so have been a grind b/c I've tried to max the savings, pushing it to ~80% monthly, but I have no real social life.  I'm strongly considering selling the condo:

1.  The San Jose market is a seller's market, and particularly my neighborhood is a multiple offer environment.
2.  I don't really like living in San Jose.
3.  I'm going to start looking at a new job soon, and I want the freedom to leave San Jose.
4.  I need to work at least 2 more years to reach FI, and I think the possibility of losing $50k in equity is greater than the possibility of gaining $50k
5.  Diversify net worth out of real estate.
6.  I purchased for $150k, so after the $400k mark I have to pay taxes on gains.

Downside of selling condo is that taxes are based on purchase price so when it resells, the fixed cost advantage will evaporate.  If i repurchased, I'd have to pay probably $400 a month instead of $150 for the same condo.

Still looking for opinions!

If I paid off the condo, my fixed housing cost would be $550/month.  If I wanted to stay here, that would be cool, but I just don't find it a pleasant place to be.  Too many parking lots.  I could move to SF and rent it out, but I'm thinking the rental income would be crushed by my ~42% marginal fed/state tax rate, so it's really not that great to make $900/month on a $400k asset.

If I sell it, I now need to decide how to / how quickly to invest $350k.  I'll take a hit from selling and moving costs in the short run, or I'll take a long term hit from the opportunity cost of a low return on that $400k.  I realize though that selling the condo and then racing to $600k is basically saying I'll leave the Bay Area, since the $2k a month afforded by $600k net worth just isn't enough to live here.  I think that's okay.

About selling, I think I'm most worried about dumping the proceeds into the stock market.  I think it's inflated.  But bonds I think are a bad deal b/c the interest rates are too low.  My impression is that bailout cash is sitting in a vault somewhere waiting to cause inflation, and we're due for another recession.  The only thing that makes any sense to me is to buy gold... but gold is a crappy long term investment, and I'd want to buy real, actual gold... but also, having $400k in real actual gold sounds incredibly dumb and not diversified.  I just don't want to have $600k in an inflated stock market.

My goal is to get savings to match the condo payoff amount ($46k) and then continue saving, but at a lower rate ($5k a month instead of $6k).  That way I can have a social life and start becoming less weird/hermit.  Keeping the $46k would let me either payoff the condo at will if I wanted to stay and lower risk, or have the money to sell it if I decide that's the right thing.

Any engineers here who transitioned to starting a business?  How did you think about risk?  How much money did you have and where did you look for investment opportunity?
« Last Edit: April 15, 2017, 05:11:16 PM by Fiveyearclub »

makinbutter

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Wow, 75k locked up in... yo-yos!  The carrying costs on that must be pretty staggering - I assume you have insurance, no?  Also, do yo-yos appreciate with inflation?  Even if they do appreciate exactly at inflation, you're still losing - conservatively - like 5k a year in opportunity cost from the capital locked up there.

Wow.

No judgment, just spelling it out like that puts it in pretty fine relief - are you ok with lighting 500 bucks a month on fire to keep a yo-yo collection?

2ish year update.  I'm 32 now.  Yay!  Still alive.

I have:
- $105k in retirement[+54%]
- $40.5k outside retirement [+6.6%]
- $354k equity in a $400k condo [+41.6%]
- $152k salary (last year was $169k) [+15.5%]
- $0 non-mortgage debt
- $50k-$100k in about 800 yo-yos... (yo-yos are stilll cool but I'm still crazy for buying them)

No progress on selling any yo-yos (but I did buy one of the rarest / best... http://www.yoyomuseum.com/museum_view.php?action=profiles&subaction=turboyo).  The last six months or so have been a grind b/c I've tried to max the savings, pushing it to ~80% monthly, but I have no real social life.  I'm strongly considering selling the condo:

1.  The San Jose market is a seller's market, and particularly my neighborhood is a multiple offer environment.
2.  I don't really like living in San Jose.
3.  I'm going to start looking at a new job soon, and I want the freedom to leave San Jose.
4.  I need to work at least 2 more years to reach FI, and I think the possibility of losing $50k in equity is greater than the possibility of gaining $50k
5.  Diversify net worth out of real estate.
6.  I purchased for $150k, so after the $400k mark I have to pay taxes on gains.

Downside of selling condo is that taxes are based on purchase price so when it resells, the fixed cost advantage will evaporate.  If i repurchased, I'd have to pay probably $400 a month instead of $150 for the same condo.

Still looking for opinions!

If I paid off the condo, my fixed housing cost would be $550/month.  If I wanted to stay here, that would be cool, but I just don't find it a pleasant place to be.  Too many parking lots.  I could move to SF and rent it out, but I'm thinking the rental income would be crushed by my ~42% marginal fed/state tax rate, so it's really not that great to make $900/month on a $400k asset.

If I sell it, I now need to decide how to / how quickly to invest $350k.  I'll take a hit from selling and moving costs in the short run, or I'll take a long term hit from the opportunity cost of a low return on that $400k.  I realize though that selling the condo and then racing to $600k is basically saying I'll leave the Bay Area, since the $2k a month afforded by $600k net worth just isn't enough to live here.  I think that's okay.

About selling, I think I'm most worried about dumping the proceeds into the stock market.  I think it's inflated.  But bonds I think are a bad deal b/c the interest rates are too low.  My impression is that bailout cash is sitting in a vault somewhere waiting to cause inflation, and we're due for another recession.  The only thing that makes any sense to me is to buy gold... but gold is a crappy long term investment, and I'd want to buy real, actual gold... but also, having $400k in real actual gold sounds incredibly dumb and not diversified.  I just don't want to have $600k in an inflated stock market.

My goal is to get savings to match the condo payoff amount ($46k) and then continue saving, but at a lower rate ($5k a month instead of $6k).  That way I can have a social life and start becoming less weird/hermit.  Keeping the $46k would let me either payoff the condo at will if I wanted to stay and lower risk, or have the money to sell it if I decide that's the right thing.

Any engineers here who transitioned to starting a business?  How did you think about risk?  How much money did you have and where did you look for investment opportunity?