How to Turn Your Furniture Into a Money-Making Investment
When Thomas Stanley and William Danko published their book, The Millionaire Next Door, some readers were surprised to discover that many wealthy people bought used furniture. Of course they didn't buy beat-up old couches or faded plastic lawn chairs. Typically they bought quality antiques that would appreciated in value.
I'm not a fan of antiques. I don't get why things should be worth more because they're old. I also don't like furniture that is just for looking at. I can do that in a museum. I want to be able to use the things in our home for their original intended purposes. A chair is for sitting on, a table for reading the paper, and the couch for spilling chips on while watching TV. But I do like the idea of using furniture as an investment.
The Basic Strategy
When my wife and I moved to a small town in Colorado we went rummage sale shopping and found a beautiful oval table made of oak. It was already priced too low at $20, but we offered $10 and the woman was happy to get rid of it for that. My wife used it in the bedroom for her makeup and such. Years later, when we were getting ready to move to Florida, we sold it for $80. We sold it through a consignment store which took 40%, so we received $48 as our share. Over the years we had already made a profit in this way several times.
It was fun to go to yard sales and thrift stores and buy things that were worth more than we paid. Well, for me, perhaps the fun part was when we sold the things and made some extra cash. But it wasn't until we moved that I realized that the furniture we were using every day was also an investment. We sold almost everything for the move, and many of the items sold for more than we had paid for them.
Now, if you are following me here, you realize that buying quality used furniture can be a way to save money now while also investing in things that can be sold for a profit whenever you might need to raise some money. You could even do this as a sideline business. If you see a beautiful solid-maple piano bench selling cheap at a rummage sale you can buy it, get on your smart phone, and have it for sale on Craigslist before you even get it home.
Keep that phone handy, because it will help you determine whether you are getting a good deal or not. If you see a wood bookcase at a garage sale, for example, you can quickly check Craigslist or other classified ad resources (local newspaper classified ads, for example) to see what similar pieces are selling for in your area. If you're looking at something you suspect is an antique you can check it out using an online resource like Kovels' price guide.
Where are the best places to get the deals? Rummage sales top the list because the sellers often just want to get rid of their excess possessions at any price. Craigslist is another option. Some people are trying to get top dollar, and some are even making a regular business of selling furniture on Craigslist, but many just want to get rid of their things. Call the seller while you're in front of your computer so you can check out the value of the item as it's described.
Thrift stores vary greatly in how they price their furniture, so you'll have to determine which stores are cheapest and stick to those. Flea market furniture is generally not cheap enough, but if you happen to see something nice you can always make a low offer. Here are some more tips for buying and selling furniture as an investment and for home use.
How to Make Your Furniture an Investment
1. Pay Half or Less of the Retail Value
Determine how much the item would sell for in a local used furniture or antique store. Pay less than half of that. If it's not possible, wait for another opportunity. What if you're not sure what the retail value is? Make your best guess and learn as you go. Part of the reason to buy so low is to prevent big mistakes. If you aim low and guess wrong you might pay full retail, in which case you still have a decent piece of furniture that can be cashed in for most of what you paid, even after you have used it for years.
2. Buy Furniture That Lasts
This strategy will work best with well-made solid wood furniture. An oak desk or maple bar stool can look just as good twenty years later with a bit of furniture polish. Upholstered furniture does not age as well, although my wife and I did buy a nice love seat for $35 and sold it after three years for $80. We don't like to buy used upholstered items any longer, but if you do so you could buy low and sell for a profit after a year (before the wear and tear is noticeable), replacing your couches and chairs one-by-one with similar short-term investments.
3. Find the Right Place to Sell
In our experience used furniture prices vary greatly from one city to the next. We did well using a consignment store that took 40% of the selling price. But you might do just as well selling things outright to a used furniture store. You might make more selling things on Craigslist if the site is actively used where you live.
Rummage sales will usually get you the least profit because buyers are looking for cheap items, but on the other hand you'll only have to move the furniture from your house to your garage. When the time comes to sell you can quickly investigate the options to see where you're likely to make the most net profit. It's even possible that different furniture investments will best in different ways.
Your Turn: Have you ever made a profit on furniture that you bought used? Tell us about it below...