High Value Rust On Wheels

Rob Bennett for The Wall Street Journal Sept 3rd, 2011

The Recycle A Bicycle store on Avenue C in Manhattan.

An old, broken bicycle is a sorry, sorry thing. Tom Waits knows—he wrote the saddest song in the world about those rusty old skeletons: “Somebody must have an orphanage for/All these things that nobody wants any more.” Well, that orphanage is New York, where used bikes are the corroded darlings of the vintage scene. In just a few years, local retailers say, prices have doubled. There just aren’t enough used bikes to go around.

It’s likely due to the city’s newfound passion for cycling—our DOT says bike commuting is up 62% since 2008—and a streetwise mindset that puts a premium on dull, battered frames. A shiny new bike locked to an Avenue A street pole, after all, has a half life of roughly 60 seconds.

In most parts of the country, an old bike has all the cachet of a cathode-tube TV. On his blog Blind Taste, behavioral economics researcher Robin Goldstein wrote up the results of an informal study comparing used car and used bike prices in major U.S. cities. There’s an inverse correlation: In towns where everyone drives, such as Phoenix, used-car prices were sky high, while the median used bicycle sold for just $120. Here in New York, used car prices ran 16% lower than in Phoenix, but the median used bike cost $200. In cycling-crazed Portland, Ore., it’s even worse.

All of which suggests a fantastic business opportunity: bicycle arbitrage. Why not buy up all the used bikes in, say, Albany, and resell them in New York? Of course, like every good idea I’ve ever had, dozens have thought of it before me.

Among them is a man known as Shane DaBikeJack, a towering former pro athlete who supplies half a dozen bicycle retailers around the city, not to mention his own stand at Brooklyn Flea. “I keep the cherries for myself,” says Mr. DaBikeJack, who declines to use his real last name for reasons I can’t quite comprehend. His buying territory: the New England ‘burbs, including Connecticut and Massachusetts. On a typical day, he’ll hit five scrap yards, the tag sales, a half-dozen Goodwills and a Salvation Army. Sometimes, driving along, he’ll spot an unsuspecting cyclist tottering by on a vintage Schwinn and offer to buy it for $20 plus the shiny Chinese-built “Wal-Mart special” off the back of his truck.

A vendor known as ‘Shane DaBikeJack,’ unloads his wares at a flea market.

It’s not easy, says Mr. DaBikeJack. The days are long, he says, and 75% of the time he strikes out. On the other hand, he has no boss and can take all the breaks as he wants: “I smoke weed and girl-watch.” And the profits can be fantastic. Most used bikes need a lot of work, and Mr. DaBikeJack specializes in retrofitting vintage frames with new parts. “I Puff Daddy it out. I remix it,” he says. But occasionally, he scores a real find: a $5 bike in perfect condition that resells for $500.

At Mr. DaBikeJack’s stand, prices start at $125 for a delivery-boy special—a scrappy mountain bike from the late ’80s. And that’s about as cheap as bikes come in New York. Even on Craigslist, the rustiest, sorriest bicycles pulled from the Gowanus start at $150. And most listings come from a handful of dealers eager to rendezvous at some vague meeting spot near the Staten Island Ferry, for example, or the Knickerbocker stop on the M line.

Among the more reputable Craigslist regulars is Peter Whitley, who sells hundreds of used bikes from his Brooklyn basement. He had a busy summer. Sales doubled after a customer advised him to rename his business Brooklyn Vintage Bicycles. To keep up with demand, he relies on a handful of vendors who shop out of town and resell used bikes by the truckload. On a typical deal, he’ll pay $50 wholesale, add $50 in new parts, and sell the ride for $200.

Mr. Whitley says he trusts his long-term vendors. But the problem with buying a used bike, of course, is figuring out where it came from. And according to Transportation Alternatives, there are dire consequences for buying a stolen ride. It not only wrecks your karma, the group warns on its website, “but also increases the chance that your own bike will be stolen.”

The advocacy group recommends Recycle-A-Bicycle, a nonprofit with shops in Dumbo and the East Village that restores donated bikes and uses the proceeds to fund job training for city teenagers (a brave new generation of bicycle mechanics). But there are no bargains there, either: Retail Director Susan Lindell says she charges market rates. The recent selection ranged from $225 for a Mongoose BMX (“so classic, so cool”) to $1,200 for a Merlin Road bike.

Many folks buying a vintage bike think they’re getting more than just a mode of transportation. It’s a signifier. “A fabulous car will get a man in bed with a girl,” says Mr. DaBikeJack. “The bike will do the same thing in New York.”

“I’m not in that scene, I really can’t comment,” says Joe Nocella. The full-time architect recently opened a Park Slope bike shop, 718 Cyclery, and is already planning a new location in Gowanus five times the size. He specializes in collaborative builds, working with clients to create custom rides based on used frames bought off eBay. The typical tab: $900 to $1,200.

To some, he surmises, a vintage bike suggests you appreciate the finer things: “It’s an easy ticket to displaying a lifestyle that’s better than the lifestyle you have.” As if on cue, a man in his 30s comes bursting through the door to check on his bike-in-progress. He is literally dancing with excitement. To refresh his memory, Mr. Nocella asks the customer to recall a few details. The response is immediate: “I just told you to make it look awesome!”

—Ms. Kadet, who writes the “Tough Customer” column for SmartMoney magazine, can be reached at anne.kadet@dowjones.com

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