Brief Tips on Flipping

So, over my time flipping guitars and gear, I've gained a bit of experience and reached a groove with which I'm comfortable. As always, your mileage may vary, and your approach can certainly be different, depending on the funding you have, the gear in which you're interested, and the risk you're willing to take. At any rate, here's a few rules I follow:

1. Your paying/trading price has to leave you a fairly considerable profit margin: This might go without saying, but if you pay $580 for a $600 guitar, you're probably going to lose money or make
   
   no profit, reason being that you may have to pay for travel (gas), shipping (and packaging, and insurance...), fees if you're using a website, etc. I typically will only invest in something if I can make close to double what I pay. This allows me to flip with a low asking price if I want to sell quickly, or if I want to maximize profits, I don't have to worry about breaking even after the bits get taken off  the top. Plus, this adds justification to the sale. Like my below flip of the Martin Ukulele, it required me to pay $100 (actually, $80) out-of-pocket, but I was all but certain I could make at least $100 more off of the sale, and I surely did. I would only drop that kind of money if I was sure I could make a considerable profit, otherwise, that money's better in savings.
2. You should buy something you know something about: again, this seems like a no-brainer to me, but you'd be surprised the people I see buying gear about which they know practically nothing. Looking up the price of a guitar on eBay or elsewhere is not a sure-fire way of knowing the price of an item. Look it up: what materials are in it? In what country was it made? Even more important, what do other musicians think about it? The Ibanez flip I recently did involved a guitar I didn't know much about (ART100) but forum searches showed that there was a decent following for the guitar. That made it worthwhile, again considering the price I paid and the potential money I could get off of it. I more than doubled what I paid because I recognized a good investment.
3. You need to know your way around inspecting and running tech on what you buy. It would be a mistake to buy a Fender MIA Telecaster if the neck was warped, or worse yet, not original to the instrument. You need to know your way around these instruments. How to inspect string height, action, intonation/setup, fret wear, electronics, etc., and how to run the gear through its paces -- what to listen for, what to adjust. A lot of the problems with instruments might lower the resale value, but they can often make for strong negotiating chips when buying gear. I bought an 80s MIJ Telecaster at a huge reduction because the wiring was all messed up. I saw the back and knew it would be an easy soldering job, but the pawn broker knew that most consumers wouldn't buy something that made no sound, regardless of how easy the fix would be. They'll sell it for just a tiny profit at that point.
4. Buy things you wouldn't mind owning: every once in awhile, you make a great buy on a well-loved item but no one pulls the trigger on buying it from you. This often happens for the higher-end gear, like a MIJ 52 Fender Telecaster reissue I got on the cheap. I ended up getting practically no profit off of it because people wouldn't buy it at the typical price others bought it at. It was frustrating, but it's the truth of the matter. Unfortunately, I didn't have room for that extra guitar so I took it for a small profit. That was a real way of showing me this fundamental rule. I loved the guitar but really only got it for making profit. If I had figured it'd be ok to keep, I'd have an amazing guitar for not much investment. The recent pedals I bought ($60 total for a DOD 280 and a Maxon AD-80) follows this rule well. They haven't sold now a week after putting them up for sale, but if they end up on my board, it's pretty great. Both pedals have a strong positive reputation and sound great.
5. Buy lower-priced items rather than big-ticket items: In my experience, it is really hard to unload the higher-priced items, especially locally. I might be able to sell a guitar for $200 or $250 to the occasional buyer around my area, but anything more than that is really tough. Most folks looking at higher-priced items are in love with trading rather than buying outright. A lot of gear forums are the same way. Don't get me wrong, you might get a buyer, especially if your asking price is below what most people ask, but then you're losing potential profit and spending a lot of time on little gain. Now, if someone tried to sell me an American Stratocaster for $100, I'm sure I would take it and try to resell for $500. That doesn't happen, though, at least not to me and not that often otherwise. People might recognize that price as a good one but may want to try to trade their way into it rather than paying the money, which makes it tough. Plus, big ticket items cost more to ship and insure, store, etc., so keep that in mind. I make a fairly good amount of profit getting items in the $10-$100 range and selling for substantially more. You're welcome to pursue the higher-priced items, but the profit margin is typically lower because the sellers know what they have, even if they're pawn brokers. I saw a great 90s Gibson LP Double-Cutaway that was gorgeous at a local pawn shop...their asking price? $1200. But you can get MIM Fenders for around $150 every day and make decent profit for little effort.

I hope this helps. I enjoy the activity but wanted to share the lessons I've learned. Feel free to ask any questions you may have!