A Fun Way to Make a Little Extra Cash

Arbitrage is executing a deal to take advantage of a difference in a buy price and sale price in a short time period. Currency arbitrage is a popular way to make money fast on a small margin. People look for opportunities in the stock markets, bond markets, commodity markets, and currency markets to make money. People usually put in millions of dollars to gain a small margin with very little risk.

I don’t have millions of dollars, but I have found a different way to make a little extra money. I call it E-Baytrage. I have played this fun game on Craigslist and enjoyed a modest profit.

Here is how it works: First, find a great deal on a product. A good place to find deals is SlickDeals.net or the Amazon Gold Box. Look for a product that is selling super cheap but has a high demand. I have successfully re-sold digital cameras, for example, but have not bought a computer or TV that has a higher capital investment and less liquidity.

So say you see a deal on a digital camera for $39.99 on Slick Deals. Look for what that exact camera costs on other websites. Cruise to Best Buy, Amazon, Google Shopping, and other sites to find the average price. If the average price is higher than $39.99, you have an opportunity for arbitrage. I only buy in if the spread is well over $10. It is not worth the time if you are only going to make $2, but it is worth it to make $25.

Once you have the product in hand, put a listing on Craigslist. Be sure to include a picture and tell how good of a deal you are offering. There are many guides online to Craigslist sales. Wait until you get a bite. You might have to do a little price negotiation, so include a little extra fluff on your listing price.

Remember to be safe. Meet at a public place like a coffee shop. I met someone at a Chipotle near my house when I sold a camera a few months ago. Take cash only on delivery. Do not give out your personal e-mail (CL gives you a temporary forwarding e-mail for the listing for free) or home address. Give out your phone number with extreme caution.

If you have a truck, you can buy and sell furnitue on Craigslist for arbitrage opportunities as well. Cruise the “free” section on weekends and pickup people’s desks, dressers, tables, and couches. Do a little cleaning and re-list it for a fair price. I got two encyclopedias that I intended to re-sell but decided to keep for myself.

Let me know if you have any questions in the comments.

Update: Reader (and friend) Jacob pointed out a drawback of arbitrage that I did not mention in the article. When you buy into something, you bear all risks of a decrease in liquidity (ability to sell) or value. You could get stuck with a foreign currency or, in this case, camera that you can not sell. You risk the entire value of the investment, but hopefully come out on top. Most arbitrage specialists use expensive computer programs to help them take advantage of the situation. I would not recommend it unless you have a few million you can lose.