Are LEGO sets a good investment?

As a general rule, Lego releases new LEGO sets, produces them for about two years, and then retires them. As a result, fans that missed out on previous sets must compete for the available quantity that is available on the market for sale from other hobbyists and resellers. Historically, many LEGO sets from licensed themes like Star Wars and Marvel double in value three years after retiring.

Some people are able to use this to claim they reliably fund their own LEGO hobby by purchasing two of every LEGO set they get. They build one and sell the other after three years.

At Music City Bricks, we do not recommend LEGO set investing to anyone. Here is our math:

Let's say you want to do it full time as a small business with you as the only employee and you want to generate an income of $100,000 per year. Let's assume absolute perfection and efficiency in every aspect of your process and see if it can be profitable for you. At the end, remember that you are unlikely to achieve perfection on even a single point, much less all of them.

Our timeline:

Year one, purchase $100,000 of LEGO sets. Sell $0. Warehouse $100,000 of LEGO sets for 1 year.

Year two, purchase $100,000 of LEGO sets. Sell $0. Warehouse $200,000 of LEGO sets for 1 year.

Year three, purchase $100,000 of LEGO sets. Sell $0. Warehouse $300,000 of LEGO sets for 1 year.

Year four, purchase $100,000 of LEGO sets. Sell $100,000 for $200,000. Warehouse $400,000 of LEGO sets for 1 year. Take home $100,000.

Year five, purchase $100,000 of LEGO sets. Sell $100,000 for $200,000. Warehouse $400,000 of LEGO sets for 1 year. Take home $100,000.

Year six, purchase $100,000 of LEGO sets. Sell $100,000 for $200,000. Warehouse $400,000 of LEGO sets for 1 year. Take home $100,000.

So you need to pay a startup cost of $400,000 for LEGO sets so that you can work for $100,000 a year.

Our assumptions:

Every LEGO set you pick is perfect and doubles in value after three years.

When you are ready to sell the three-year-old sets, you are able to sell all of them, and they all sell immediately.

The platform you sell them on charges you no fees to list them, sell them, or process payments for you.

All your sets sell with the buyer paying for all packaging materials, labor, and shipping costs on top of the sale price.

None of your LEGO sets get ruined while in shipping to/from you or while in storage for years.

You are able to securely warehouse $400,000 worth of LEGO sets in a temperature and humidity-controlled environment for free.

You have not electric bill, gas bill, internet bill, trash/dumpster bill, or other labor costs.

You have no costs for shelving, forklifts, fire suppression, or insurance related to $400,000 worth of LEGO sets or the warehouse.

You have no labor costs associated with buying, receiving, storing, and fulfilling orders for hundreds of thousands of dollars of LEGO sets per year.

You have no acquisition costs beyond purchase price for the LEGO sets. No labor to go get them. No shipping. No sales tax. No inventory/property tax.

You have no costs to setup the business or operate it or keep up with the bookkeeping.

You have $400,000 available to create a business so that you can have a job that pays you $100,000 per year - assuming a perfect business with no operating costs.

The reality is that you would be lucky to make $10,000 a year and you would be working 60-100 hours a week.

So, how do businesses make any money reselling LEGO sets? Sadley, many don't and they go out of business after spending down all their life savings or a business loan trying to keep it afloat before going bankrupt.

Some can lower their upfront costs by purchasing LEGO sets on clearance, but it can be hard to source enough to run a business without spending a lot of time and money driving around hunting deals.

Some can lower their costs by being selective about what they buy so it goes up in value sooner and they do not need to warehouse it as long.

Some are lucky enough to inherit a building or the startup costs so they can start the process more aggressively with less risk.

Even with everything perfect, it is a hard business model to make work.

Most LEGO set resellers that survive are not doing it as set investing, but as authorized resellers where they buy the sets at wholesale from LEGO and sell them in less than 30 days. This is also a hard business model because the margins are so small for sellers that do not have the buying power of Walmart and Target.

Think long and hard before fooling yourself into thinking you can make money at LEGO set investing.