Would you believe buying and selling Beanie Babies taught me a lot about flipping vacant houses?
I’m about to share with you exactly what buying and selling millions of dollars of Beanie Babies taught me about real estate and, I’m not kidding…I bought and sold millions of dollars in Beanie Babies between the end of 1998 and early 2001.
Listen in as I unfold my entire journey of buying and selling millions of dollars of Beanie Babies and what it taught me about flipping vacant houses!
If you’ll recall, Beanie Babies were really popular back in 1998. Collectors were grabbing them and paying top dollar. They were in short supply. It was an interesting time and I kind of tripped over the opportunity and then seized it.
Where It All Began
A little background, I was at a real estate seminar that I was teaching. This was years ago in Dallas and I was there with a couple of other people who were co-teaching with me, so I had some downtime.
I was just walking around in the hotel and, in another meeting room, they had this Beanie Baby show going on with all these dealers with tables and racks behind them with all these Beanies. They were all for sale and you could trade them, sell them, buy them, etc.
I had heard a little about them and thought maybe I’ll buy a couple for my not yet born daughter Nicole, in case they may be collector’s items someday. I saw a gentleman behind the table, obviously a dealer, who looked very intelligent and very well dressed. He had a gold Rolex watch on and I thought, “Man, what’s he doing here?”
I went over to him and I asked, “So, what is it about these Beanie Babies?”
I’ll never forget. He leaned forward on the table on his knuckles and he said, “Son, you have no idea what you’re looking at.”
He started telling me about the business and, a couple of weeks later, I went to a flea market near where we lived in Florida at the time with all kinds of stuff…new stuff, used stuff, junk, good stuff.
There was a dealer there who had a booth and, back behind her up on a shelf, were these brown bears with the Union Jack (the British flag) embroidered on their chests.
I asked the dealer, “What’s the story with those?”
She said, “Oh, those are called Brittania and are only distributed in England, and so you can’t buy them in the stores here in the U.S.”
I said, “Well, how much are they?”
And she said, “$200.”
I thought that was kind of a lot and so I went home and I started looking around on eBay and I found a dealer in England who had a dozen of these Britannia bears for sale for $1,200 (so, a hundred dollars each.)
To me, that was a lot of money to send to England to a complete stranger. So, I reached out and we talked a little by email and on the phone until I got comfortable.
I sent him the money using Paypal and he sent me the 12 bears. I then turned around and listed them one at a time on eBay and they sold like hot cakes. I was getting $225, $250, even as much as $300 on occasion. I thought, oh my gosh, I have discovered something here!
I went back to my friend dealer in England and I bought a case (108) of them and continued selling them one at a time because the demand was there and people were bidding them up.
Then, the guy in England called me and he said, “Hey, there’s some Beanies that are distributed only in the U.S. that I would like to sell here. Could you go and find them for me? Here’s what they’re called. Here’s what I can pay for them.”
So, I looked and looked, created some relationships and eventually weaseled my way into a whole network, a national U.S. network, of these dealers.
We Have Lift Off
Eventually, it made sense for me to actually go to England and meet this guy and some other dealers that I had gotten friendly with.
This turned out to be a very good thing to do because most people won’t travel and do the work. I was willing to. I learned from my dad a long time ago that business is all about relationships and the importance of getting face to face. You can’t beat it.
So, I booked an airline ticket and a hotel, and went to England. I met all these dealers, really strengthened those bonds and started buying and selling just literally thousands of these things.
The Beanie Baby Jackpot
Ty Warner was the name of the man who owned the company Ty. They’re still in existence. They still make Beanie Babies today.
He had a huge ego and when they finally reached a billion dollars in sales, he threw a party for his executives. There were 80 or 90 of them there and he gave each of them a very unique bear that he signed on the tag and called it the “Billionaire Bear.”
Well, I had a dealer friend who had a friend that worked for Ty in Northbrook, Illinois, and she was at that party. She got hers and picked up a few that people left and then my friend made them available to me for $10,000. I was like, “Whoa, I’m not touching that until I know I have a buyer.”
I offered them to my English guys and they went around and shopped them to their biggest, most willing-to-spend collectors and sold two of them, for how much I don’t know, but they were willing to pay me $35,000 each!
So, I bought two for $10k and sold them for $35k each (so, spent $20k, made $70k and profited $50,000.) But, for a transaction that large, I decided I was going to actually go to England and deliver them.
I collected the money and came home with $70,000 in U.S. dollars in cash in my suitcase going through security. Can you imagine doing that now in the world we live in today?
That $25,000 was the highest single profit that I made on any one Beanie, but I got very close to that on a bunch of others.
From Beanie Babies To Real Estate GOLD
Here’s what all of that taught me about real estate. I discovered that, it’s true, it’s easier to find a house for a buyer than it is to find a buyer for a house.
So effectively, you find out what your buyer wants and then go get it. You find out what your buyer’s willing to pay for it. Then go get it, buy it for less and then provide it to your customer.
In the case of wholesaling houses, our customer is a rehabber or a landlord or both. Either through a relationship or through our Cash Buyer Data Feed or Investor Buyer Data Feed, you can go and find these buyers and see exactly what they’re buying and exactly what they’re paying, and then go find them what they want.
Another lesson I discovered, carrying that concept to real estate, was that the easiest and most direct way for me to find a house that my buyer wants and buy it for less than what he or she is willing to pay, was through vacant houses.
I would know what my buyer wanted and I would go and search every vacant property I could find, make offers on them and then find one that fit the need, mark it up and make my profit.
But the solution, what made it work, was not just randomly looking at houses. It was specifically looking at vacant houses or abandoned properties, because, if you think about it, every vacant house, with the exception of someone’s second or vacation home, is a representation of a problem the owner has. Let’s face it, a house sitting vacant is a problem, if for no other reason because you’ve got vermin, vandals and vagrants that are all preying on the house.
You’ve also got an insurance problem with vacant houses. You might not know this, but if you have a vacant house with a homeowner’s or a landlord’s insurance policy, and that house is vacant for more than 30 days, there’s a pretty good chance your insurance is not actually covering you because most policies contain an exclusion giving them an out and they would most certainly exercise that exclusion and deny your claim.
Read your policy. More than 30 days of vacancy, and you’re likely not covered. So every vacant house represents, just on its face, a problem and at least that much motivation on the part of the owner to get rid of it or occupy it certainly. That was a big discovery for me.
If you’re looking to start working with vacant houses for your REI business, I suggest looking into the Vacant House Data Feed. This system gives you instant access to millions of verified vacant houses nationwide. You can click here to check it out today!
The other thing that I learned from buying and selling millions of dollars in Beanie Babies, that translated to real estate, was that I became comfortable with making large sums of money. For some people, they never get comfortable with that, and therefore they never do.
So, I got very comfortable with that. I made $50,000 on two Beanie Babies and there was very little work involved. The concept of making large sums of money and that being normal and okay and part of my every day, became a reality for me.
And Then, The Music Stopped…
Here it is, more than 20 years later, and I look back on that journey as a real eye opener lesson for me.
The Beanie Baby bonanza went and ended, just like that and I got stuck with one box of them that I had left when the music stopped. All together I had about $15,000 in them but, over the course of that two years, I made almost a million dollars in profit.
I looked at the 15 grand in that box and thought, “Hey, so what?” And I still have them and, every now and then, I’ll go on eBay and take a look at what stuff is selling for, and they’re up somewhat over when they collapsed, but not much.
That’s my story. That’s what buying and selling millions of dollars in Beanie Babies taught me about real estate and flipping vacant houses.
What are some BIG lessons you’ve learned that have helped you in the world of real estate investing? Have you worked with vacant homes? Let me know in the comments! I personally respond to each comment and I love hearing from you.