So, continuing on with my senior class project, we want to get a handle on dirt bike prices in order to competitively price a bike for sale, find a good deal, or better yet set out to flip one.
Unfortunately, flipping dirt bikes is a bit risky due to factors ranging from basic price depreciation to, possibly more importantly, the wear and tear they endure while the owner has a blast in between buying and selling it. Consequently, depending on the owners own personal restraint, the condition, and possibly lifetime, of a dirt bike can be quite unpredictable. If someone is legitimately going to try and call the purchase an ‘investment’ for the purposes of flipping it, then let’s hope that someone can refrain from
Out of control riders demolishing their ROI
Overview of Dirt Bike Data
Before we start ‘magically’ coming up with fair market prices for used dirt bikes, we ought to do some exploratory data analysis. Put simply, EDA is the process statisticians go through in order to familiarize themselves with a set of data before pursuing a more rigorous, in-depth analysis.
This will allow us to get a sort of ‘birds eye view’ of the prices.
After digging through loads of spam and with some help from a few of my trusty research assistants, I had the classified ads for dirt bikes neatly labeled. Each dirt bike for sale had its Brand, Model, Motor Size (cc), Year, and Condition labeled, making it ready for analysis. I narrowed the set of listings down to only dirt bikes with 250cc size motors and was left with a relatively organized collection of about 6200 recent for-sale ads in California.
Why Price Depreciation Is Important When Buying Used Goods
Suppose you are buying something you intend to re-sell at a premium. Unless you already have a buyer lined up or there’s an incredible demand for what you’re going to flip then a bit of time is likely to pass in between transactions. Especially if you’ve got a particularly fun item to flip and are taking your time reselling it! The problem is that almost all items lose value over time. So, it’s important to have an idea of the rate at which your profit margin is disappearing while you hold on to your purchase.
The Ideal Time to Buy a Used Dirt Bike
I began exploring the data by looking at how age affects the resale value of a dirt bike. This would show us the approximate depreciation rate of 250cc dirt bikes over time. By graphing the Asking Prices against the Year in which the dirt bikes were made, I could hopefully find out how old dirt bikes tended to be when their market price starts to level out. If the dirt bike’s price is depreciating slowly, I could enjoy riding it for some time without stressing about missing my window of opportunity to re-sell it and at least break even.
As you may have guessed, the re-sale value of a dirt bike follows a very similar pricing trend as most other products like cars. In the first fews since the bike is made, the price drops significantly and then tends to plateau after some time.
The x-axis shows us what year the motorcycle was made in which essentially tells us how old the bike is.
With that in mind, we see that during first 5 years or so since being released, the re-sale value of a dirt bike falls significantly. So if you are planning on re-selling the bike soon after you buy it, this is the least economical time to buy it. The re-sale value drops by about $800 for each year you hold on to it.
For dirt bikes 5 to 13 years old, the depreciation seems to be a bit less severe, making it much more feasible to buy, use, and then re-sell without losing any money. Dirt bikes in this age range seem to only drop by about $125 each year they age. Buying a dirt bike sometime in this range would also be ideal for a new rider who may change his or her mind about what bike they want to continue riding.
After about 13 years, the re-sale values seem to bottom out around $1000. With little, if any re-sale depreciation, the asking prices for these dirt bikes becomes a bit haphazard.
Flipping a 250cc Dirt Bike
All in all, if you’re hoping to flip a 250cc dirt bike then here’s my advice -
- Take your time finding an underpriced bike to buy that’s about 5-13 years old
- Take good care of it, keep it clean, make a nice for-sale ad for it, marking up the price a bit
- Post your ad around, patiently leaving it up for sale while you tear up the tracks.
- Then if whatever profit you make hasn’t been eaten up in gas money, buy another one and repeat!
Good luck and happy riding.
Stay tuned for the next step of my project to pinpoint blue book values and trends for everyday used goods.