Can Designer Clothes be a Good Investment?

I’ve heard that certain designer clothes, shoes, and handbags are “in demand” or “hold their value” better than others.  Brands like Chanel, Escada, Gucci, and Jimmy Choo come to mind.  To me this is just code for, “I am going to spend $1000 on something, and it still might be worth $200 when I am done with it.”  Sure it “holds its value” better then some no-namer item that you buy for $200 and is worth $0 when you are done with it, but a 75% loss is hardly a good investment.  So I was a bit surprised when I saw that you could actually make money buying designer clothes.

This is investment is simple.  You buy a used, good condition designer item for a large discount, through a consignment store, estate sale, or some other non-retail route.  You turn around and lease the item through one of several wardrobe rental websites (StyleLend, RentMyWardrobe, etc.)  Over time, you pay yourself back for the cost of that item, then everything else is profit.  When the item is no longer in demand, you can sell it and move on.

Items typically rent on a one week basis for 5-10% of their retail value.  For instance, a Pink Chanel Purse that retails for $3200 is listed for lease at $320 per week.  A pair of Christian Louboutin shoes that retails for $1295 is listed for lease at $90.  Keep in mind the website will take a cut; typically around 20%.  The key is to buy the item for an extremely low price.  It is much more difficult to break even if you paid the retail price for an item; it might take 15 to 25 rentals and by then the item may be out-of-style or have too much wear-and-tear to continue to rent out.  This is also a good route to go if you already bought the item, wore it, and just want to make some money instead of having it sit there in your closet.

Wardrobe rental appeals to a younger crowd.  So don’t expect to make any money leasing out brands like St. John or Escada.  On the other hand, Chanel or Ted Baker seem to do well.  And with items starting for rent as low as $20, there is definitely a chance to experiment with renting out lower cost but fashionable items like a Saylor dress, before your try it with a Louis Vuitton purse or shoes.  If you are thinking about selling something designer at your local consignment store or on eBay, it’s probably a good idea to check out the for-lease market first to see if the potential for income is worth the hassle.