Granted, I have had two people very familiar with taxes (including my CPA) tell me that as a hobby, it is not worth the time to make it into more than what I am currently doing. So basically, is just being a casual guy who just moves cards here and there the right approach? Or is it worth doing cash flows and something of an inventory?

As an aside: This is part of reason I took down my sales list. If I go forward with this, I want a clean cut start date of April 1st with whatever inventory I have, using a current market value for my investment (since it will go from personal to business).

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MOTL's Most Likely to Play in the Pro Tour - 2007, 2008, and 2009
(My Nationals)

Personally, I think it easier to find those people willing to move collections (and I know a few who have already given me great prices on a few things for quick cash) and make the profit that way. I do have a few people I hope to talk to this weekend, which could hopefully sway what I do.

__________________
MOTL's Most Likely to Play in the Pro Tour - 2007, 2008, and 2009
(My Nationals)

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Originally posted by MAB_Rapper:
Keep in mind, while the goal is to make a profit, as far as I am concerned any profit is better than none. I don't need to make $5-10 a card for Type 2 to turn the profit. Let's say I am able to pick up 25 Stoneforge Mytsic now for $13 and sell at $15. That's still $50 in profit, no matter how you slice it.

Personally, I think it easier to find those people willing to move collections (and I know a few who have already given me great prices on a few things for quick cash) and make the profit that way. I do have a few people I hope to talk to this weekend, which could hopefully sway what I do.

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With a margin that low, however, I'd be worried about getting burnt via buying high then having to sell low. If your volume is high, that doesn't matter, but it seems to me that you aren't looking into getting that high a volume.

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Originally posted by andrew777:
Sure, but lets say your margins will only be around 20%. So $10,000 in monthly sales nets you $2,000 in profit. That isn't a lot and selling $10,000 in type 2/extended stuff a month requires a lot of work. Also remember it means you are buying $8000 in cards as well. Economically you might just be better off with a part time job unless you really enjoy the MTG trade.

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Point taken, but keep in mind that the MTG trade would actually be my side job. I have a full time job already and this was just going to be that little something extra.

Not to mention, I'm 100% behind Josh's statement. When I make deals today (trade or cash), it is more about getting people what they need than anything. I tell people, if you get what you want and I at least get something that I can move to someone else, I'm doing good.

__________________
MOTL's Most Likely to Play in the Pro Tour - 2007, 2008, and 2009
(My Nationals)

Keep in mind, you have to maintain professionalism while pursuing your hobby. If you sell locally, when you sit down at the table across from a customer, and you roll over him and win fast, with no contest... well, suddenly you're the ******* who sold him $300 in cards for his deck AND beat him into the ground, rather than just being the ******* who beat him into the ground.

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Originally posted by ScottyStyles:
I'd say no; not because of it's viability or anything like that. It's because I think you should never mix your passions / hobbies, with work. Once you do, your hobbies become work. I'm a gearhead. I love racing. I keep thinking about how cool it would be to open up a speed shop, and tune cars for a living. But I never will; as soon as I do I will never want to work on my own car, and driving it will mean so much less.

Keep in mind, you have to maintain professionalism while pursuing your hobby. If you sell locally, when you sit down at the table across from a customer, and you roll over him and win fast, with no contest... well, suddenly you're the ******* who sold him $300 in cards for his deck AND beat him into the ground, rather than just being the ******* who beat him into the ground.

Another thing is it will make your taxes an absolute mess, unless you illegally do this all under the table. You've gotta keep records of every single sale and purchase. That's a lot of records to be keeping, and a LOT of paperwork during tax season to get everything ready.[

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I fully get that and I have no intent of arguing. However, I don't see any difference in being the jerk who trades $300 in cards or sells that much to a person. Either way, there are 3 things that work in my favor:
1) I play next to no constructed outside of Vintage.
2) I have the business background and 5 friends who are CPAs.
3) Taxes wouldn't be as hard if you keep those books seperate, which I 100% plan to do.

Again, not intending to argue, just putting out more facts.

__________________
MOTL's Most Likely to Play in the Pro Tour - 2007, 2008, and 2009
(My Nationals)

quote:

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Originally posted by MAB_Rapper:
Granted, I have had two people very familiar with taxes (including my CPA) tell me that as a hobby, it is not worth the time to make it into more than what I am currently doing. So basically, is just being a casual guy who just moves cards here and there the right approach? Or is it worth doing cash flows and something of an inventory?

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Originally posted by JoshSherman:
I'm actually looking at sort of the same thing. My local scene doesn't have a singles market at all. There are two stores, one established and one getting into Magic. The established one gets it singles prices from... actually I have no idea where they come from because they're insane (non-Jace2 planeswalkers for $80 insane). The new one has said I could do singles there if I wanted to. I'm more concerned with getting players the cards they need than making a huge profit.

With a margin that low, however, I'd be worried about getting burnt via buying high then having to sell low. If your volume is high, that doesn't matter, but it seems to me that you aren't looking into getting that high a volume.

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Originally posted by joz:
Draft tournoments are one of the best way to make money in this type of business.

Since people are willing to pay a premium to draft tournoment.

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this would require a fair amount of money and work, but it would be worth.... i remind some years ago, the first BoM's tournament in annecy, where the "shop" was selling just some foil promos, coke and sandwiches; well the last year they had one of the biggest stand i have ever seen, thousands of cards and people working for them

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Originally posted by rats60:
I would say listen to your CPA and keep it a hobby. The only way that I would do it as a business is if I had a physical store or had a website and was setting up at tournaments.

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I agree with this statement and I will expand upon the the answer as well.

If you don't have a store front then you need to wary of several things. 1) Word travels fast. Once players know that you are selling cards store owners find out soon enough. Very few store owners are prepared to let someone else use their facility to make money. Getting banned from the only places that you can play magic because you are selling magic is a problem.

I can speak from personal experience on this one. When I was a TO I thought that I should sell some singles on the side, during my events, to help the cash flow. When word got out that I was selling singles both of the stores in my area basically told me. "I catch you selling cards and you are banned".

2) You have to keep inventory. This creates all sorts of problems. A decrease in value of one card can nullify a weeks worth of work when your margins are only 5% or 10%. If you happen to be holding 10 or 12 copies of that card then the change can nullify a months worth of work.

Keeping inventory creates all sorts of issues. You have to follow every format closely because one banning can alter the format and change the value of multiple cards at once. As a player you have insight into potential changes but the ability to withstand the losses may not be there.

Then there is the money aspect. Example, client A walks up to you and say "Hey I need a Mox for the upcoming tournament. There is none in town can you get me one?" You say "Sure thing". Guy goes "Let me know when you get it and I will give you the money." What do you do? You don't have a store front so most people are not going to give you money up front to buy cards off the Internet. You have to fund that out of your own pocket and hope the guy pays you the money when you get the card or your stuck.

I agree with the post that unless you intend to do significant volume with at least 15 - 20% then just stick with a part time job. It is safer and less work.

3) Acquiring inventory is a pain in the neck. Once people know that you are approaching trades with the intention of offering store like trading margins then they will be less likely to trade with you. If you start wandering around a convention/event offering %50 or %60 then you might have difficulty getting the cards you need. If you offer %80 cash then you'll have a bit more luck but then you are laying out a lot of money and point two become very significant.

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Originally posted by sys41o:
I agree with this statement and I will expand upon the the answer as well.

If you don't have a store front then you need to wary of several things. 1) Word travels fast. Once players know that you are selling cards store owners find out soon enough. Very few store owners are prepared to let someone else use their facility to make money. Getting banned from the only places that you can play magic because you are selling magic is a problem.

I can speak from personal experience on this one. When I was a TO I thought that I should sell some singles on the side, during my events, to help the cash flow. When word got out that I was selling singles both of the stores in my area basically told me. "I catch you selling cards and you are banned".

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Very valid point. And again, this is just to point out some facts, not to argue.

The local store owner (at least the one I deal with 99% of the time) knows I do some minor stuff on the side and has actually allowed me to do a deal here or there, especially when it comes to cards he doesn't have. Most of the people locally know I do tons of online deals and have actually come to me looking to buy stuff. I don't know if this is an advantage or not, but it does at least give me a starting point of clientele that is not MOTL (which 95% of what I do would be here.)

__________________
MOTL's Most Likely to Play in the Pro Tour - 2007, 2008, and 2009
(My Nationals)

MAB_Rapper: I have had two people very familiar with taxes (including my CPA)

Not sure about how USA IRS works. I do know that most Asian tax authorities work by checking on your bank balances, property purchases. As long as your bank balances/property purchases could be explained by your annual declared income, you are fine.

JoshSherman: The new one has said I could do singles there if I wanted to. I'm more concerned with getting players the cards they need than making a huge profit.

If you focus on your customers' needs, you will make profits. In business, demand matters much more than supply. If you have cards that your customers demand, you will earn money.

Andrew777: Sure, but lets say your margins will only be around 20%. So $10,000 in monthly sales nets you $2,000 in profit. That isn't a lot and selling $10,000 in type 2/extended stuff a month requires a lot of work. Also remember it means you are buying $8000 in cards as well.

Andrew has a very good point. If you work with 20% margin, you don't make much. I make 10% usually, 15-25% if I could make a good buy. UC/C is important. UC/C can net you 30-50% easily. I prized UC/C sales much more than Dual sales. I net $500-1000+ a month, depending on volume/cost price. Its not a lot but for a graduate student, helps to pay the bills.

And if you are selling $10000 every month, it is likely you need to have $30000-500000 of inventory, or even more. Otherwise, you need some hyper fast inventory turnover to do $10000 sales on capital of $10000-20000.

GenghisTom: The profit margin for magic cards is so thin. Buying a card for 13 then selling for 15 is harsh especially when you have to go around and physically sell those cards, even if you sell four playsets thats only 32 dollars.


I agree 10%, even 20% margin will be thin. But the alternative is cash sitting in bank. Our local interest rate is 0.5% for 1 treasury bill. To me, 10-20% is rather attractive.