Estimate Time7 min

Come sell away: Making money from reselling

Key takeaways

  • Many people are selling things from their own closets or homes—or reselling items they source—to earn extra money.
  • It's important to research pricing and take expenses such as shipping and fees into account to be profitable.
  • You also must keep careful records and pay taxes on your net income.

Chin Diancarlo, 29, and his girlfriend got engaged on Christmas Eve in 2021. The couple thought they had ample savings to fund their wedding but quickly realized they wouldn't have enough for a honeymoon. "I started freaking out because I already had my regular bills, plus whatever we're paying for the wedding," Diancarlo explains. He was looking for a side gig to cover costs when he remembered coming across an influencer who made money reselling video games online.

The next month, with $87 in his pocket to spend and a video game pricing app on his phone, Diancarlo visited a video game store near his hometown of Blue Island, Illinois. His goal: finding games he could sell online.

"Using the app, I looked up prices of games in the store and compared them to what they're worth online. Most of the time, there's not much resale value, maybe a $2 profit. But sometimes, the store doesn't update their prices [when there's a spike in resale value] and you can make a bigger profit," Diancarlo explains.

That day, he bought a game for $7 and sold it for $27, launching his business. Once he and his fiancée had some success, they expanded their search to garage sales, flea markets, and online marketplaces. By June of the next year, the month the couple got married, they had netted $6,000 from video game sales, paying for their honeymoon to Orlando, Florida.

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Finding the right reselling side gig

While Diancarlo had success from the get-go, sometimes it takes trial and error to find a good category. Amy Tran Hoang, 36, a pharmacist in Bethesda, Maryland, started looking for ways to make extra cash in 2020 when her husband lost his job.

First, they tried selling yoga items as a third-party seller on a major ecommerce platform, but the market was saturated. After some research—looking at popular items that were often replenished on the site—the couple branched out into buying highly discounted items and packaging them as multi-item bundles. "We mostly resell groceries from local stores," she says. For instance, she'll buy cereal for $2.50 per box when it's on sale and resell it online as a 3- or 4-pack. This year she's on track to make 6 figures from this work. "I like to be at no less than 40% profit margin and the minimum of $4 profit for each item."

Caleb Roth, 34, who lives in Winona Lake, Indiana, also became a third-party seller on a major ecommerce platform, reselling books from library sales, garage sales, and online marketplaces. The first year, his profit was $56,000. About 8 years later, he's consistently earning 6 figures and has quit his day job in medical device marketing.

These sellers have a few things in common. They found a niche that sells well, have a constant stream of new merchandise coming in and know where to find more, and ramped up slowly to work the bugs out of the process. These strategies are what Bobby Hoyt, founder of side-hustle-tip site Millennial Money Man, says can mean the difference between profit and loss.

"Every side hustle is different, and some have low earning potential with minimal time and effort, and some require more upfront work for a higher level of income," he says. "Ultimately, the best side hustle is one that aligns with what you want financially and that fits your personality and lifestyle."

Going green for green

Some people may not need to make a lot of money. They're just looking to do something ecofriendly with their possessions or hoping to fund replacements for old items. That's the approach Cassandra Stoner, a 33-year-old mom in Wichita, Kansas, takes to earn extra money. Stoner says her 3 kids are constantly outgrowing their outfits, and she was giving away "hundreds of dollars in name-brand clothing" every few months on social media sites—and spending a small fortune to regularly restock their wardrobes.

She heard about an online consignment site where she could sell clothes piece by piece as well as by lot. She decided to give it a shot. "I downloaded the app, put a few of my daughter's outfits on there, and waited for sales. It was so much easier than other ways I had tried offloading things," she says.

Sales came quickly. The site charges for shipping and gives her a prepaid postage label, so all she has to do is put the clothing in a mailer and bring it to the post office. Once the items are delivered, she receives digital payments she can transfer to her own account or use to buy new-to-her clothing on the site. This year she will earn $1,000, she says.

Dallas-based Alison Watson, 36, is also selling previous purchases on an online marketplace. Once she started living on her own, she started shopping for apartment furnishings at the local goodwill store. Her first purchase was a $20 vanity that she repainted. She kept adding to her condo's décor until, she says, she had too much furniture. Needing to make room for her next great find, she posted the vanity for sale on an online marketplace. It sold quickly for $350—a $310 profit after accounting for the extra $20 she spent on painting it.

"Thrifting furniture is just a timing thing. You never know when you're going to find something else. And then I'm like, ‘I can't keep all of it; which item is leaving?'" It's also highly lucrative. Watson, who shifted to selling on a crafting-focused marketplace, now makes 6 figures rehabbing and reselling items.

Doing due diligence

If you're thinking about selling things, take note: It's not always easy. "The product research is probably the hardest part," says Tran Hoang, who uses an app from the ecommerce platform that instantly tells her if an item she's considering selling has enough margin left after acquisition and shipping costs.

Time is another important consideration. Tran Hoang started out shopping at supermarkets. Now, she does much of the legwork online. Stoner sets prices based on what's sold on the platform in the past and will drop her prices quickly if something isn't selling right away. She'd prefer to do all the packaging and shipping at the same time rather than let items sit a while. "If there are items that don't sell until weeks or months later, it's hard to remember to mail them," she adds.

And then there are taxes. No matter your reason for selling, you have to give Uncle Sam his cut, says Tom O'Saben, director of tax content and government relations for the National Association of Tax Professionals. If you're selling through a major commerce platform, chances are the site will collect sales tax on your behalf, but you'll still need to pay self-employment tax, federal income taxes, as well as state and local income tax. "State laws are not consistent from state to state and region to region. You need to look and see what the rules are in your state." 

Without an employer to withhold the taxes on your behalf, you may need to pay estimated taxes throughout the year. And you must file an income tax return if you bring in $400 or more from self-employment. If you get paid through a third-party payment platform, you should receive a 1099-K form if the gross payments you receive exceeded $20,000 and you had more than 200 transactions in 2023.1 Whether or not that 1099-K shows the correct amount, it's your responsibility to report all of your income. Consult a tax advisor regarding your individual situation.

It's also important to keep careful records of how much you pay for what you're selling—as well as all associated costs, such as postage, packaging, internet service, gas mileage to the post office, and supplies necessary to make an item sellable. Watson, for example, deducts the cost of paint stripper and paint from her gross sales. This is as much for tax purposes as it is to make sure you're actually profitable, adds Hoyt.

"It's common for people to start a side hustle and forget to evaluate it on a regular basis to make sure that they're actually making money," he says. "If you're buying and flipping garage sale items and end up spending nearly as much for inventory as you're generating in revenue, you can't expect to reach your financial goals."

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1. "IRS announces delay in Form 1099-K reporting threshold for third party platform payments in 2023; plans for a threshold of $5,000 for 2024 to phase in implementation,", November 21, 2023.

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