Building up second hand frames to resell

There could be some sticky points with what you propose in that even though you won't see what you're doing as a business, your customers probably will. You'll be accountable to doing right by them and there will be times when that will feel like work, be work, and cost you money or time like work.

The answer to your question also depends entirely on what you're paying, if anything, for the bikes and parts you're working with. In some times and places, old bikes in need of work that's hard to time-justify outside of being a labor of love are abundant. But if there's a strong used market, maybe not such much.

A very good avenue for the passion you're talking about is getting involved with community or nonprofit bike shops as a volunteer. Most cities have organizations or businesses in this vein, and most of them welcome volunteer labor to make sellable bikes out of their old parts. And, they typically have proper insurance and other trappings of actual businesses in place, which are all other ways the outside world could expect you to be a business even if you don't consider yourself one if you're just doing it on your own.

Some of these community initiatives keep a very low profile, often without any web presence, and might be tricky to find. They are sometimes side projects at various charities (focused on homelessness, substance abuse or prisoner resettlement), schools, churches or even squats. It's definitely worth asking around in local bike shops or clubs.

If you don't have a community bike shop or project nearby, consider starting one. But the time you've done all that asking around you will likely have some contacts etc.

I think it depends.

Sometimes a used bike is basically sold as “broken” only because it needs some adjustments and maybe new tubes, 1 or 2 new spokes, a new chain, new cables or new brake pads. If you can find such a bargain (and spend the effort in finding such a bargain) I think it’s easy to make a profit or at least break even.

Other times used bikes are advertised with very bad photos, bad description and so on. Simply clean them, maybe make some adjustments, apply some chain lube, inflate the tires and put them online with good photos and a good description for some nice profit.

I think completely “overhauling” a used bike is often not worth the effort. Most people who buy used bikes don’t know anything about them. If it rides somewhat decently and doesn’t look like it’s completely rusted through they’ll buy it. They don’t know about chain wear, worn brake pads or old/bad tires. So putting a new chain, new tires etc. on such a bike won’t really increase the price you can ask for it.

I’d be very careful about the legal side of thing. Make sure the bikes (or spare parts) are not stolen. Make sure you sell the bikes as used, it’s a private deal and you are not legally responsible in any way.

My experience has been that especially when time spent working on a bike is figured in, there is very little profit realized from being a backyard bicycle mechanic. The "profit" is manifest in feelings of competence, satisfaction with a successful build or repair, and the thankfulness of a friend or neighbor who struggled to ride because of this or that mechanical issue.

It's even very difficult (from my perspective) to build up a frame set and end up with costs that are equivalent to what the same bike with stock components & ready to ride would cost from the bike shop. Here, I'm not even considering the time involved with a build. Simply acquiring the parts I desire for a frame set plus the frame set is nearly always more than the stock bike. I have, in fact, at times opted to buy the stock bike and switch the parts to what I envision because the math worked out to where it was several hundred dollar difference (frame set + parts)-(same bike stock)=$300+

One way to make money is to buy things like derailleur cables and outers in bulk--its not difficult to find bulk cabling for about $1-2 per cable. I then will offer a deal where buying the cable from me is $10 installed. Same with parts like a crankset. The cost of a crankset I have is $x installed. This allows a bit of markup from say the average price of same part on line, and if it's something I got a deal on or it came off a bike I've switched parts on, that increases the profit margin. I can tell you, though, it's easy to lose on a deal like that if the install is difficult, you break something, etc. Again, considering the time involved, there is little left as a profit. The times where I've really done some accurate accounting of costs and labor time, it's worked out to where I was making pennies to a few dollars per hour.

As Nathan mentioned, the existence of bicycle Co-ops, where the public can donate bikes and parts they're not using and the co-op then will attach a very reasonable price to a part for sale to another is a good way to get awesome prices on bikes and parts. Because of the low prices--and typically the tools and available expertise that comes with a reasonable hourly shop fee (you still do the work, but use their tools), one can decrease the cost of parts for a build enough where a profit is eeked out.

Thus, in my experience, the profit of my hobby is rarely realized in cash, but rather the positive feelings generated by getting something working and having it customized to my tastes as opposed to a manufacturer's cookie cutter builds.

I would just like to work and tinker on bikes in my free time.

Then no, you will not be able to make (small) profits or even break-even.

You will miss the scale savings, both in term of time and costs. These savings are what makes bike mechanics and bike shops so cheap (I mean, they may look expensive in absolute term, but try to beat them on their price for the same parts, same quality, same warranty on the bicycles ...)

you will spend a lot of time doing inefficiently, you will find yourself buying a pratically perfect bicycle sold as broken, thinking you will make a decent small profit from it, only to discover halfway through your build you need a specific tool that will eat up 5 times the small profit you planned to make.

Plus, since you will be scraping for cheap parts, bicycle in disrepair, statistically you can expect you would "help" siphoning some money to bike thieves and the likes (unless you are extremely careful ... and you plan to spend a lot of time answering on-line ads asking for receipts/proof of sale ...).

Finally, consider that if you sell someone a bicycle as "working conditions" or whatever language, and this someone is injured because some of the parts suddenly break apart, you may be liable to some compensation (this is strongly country-dependent).

On a more positive note: if you live outside a large city, you may have access to both a large storage space for free (for example if you own your place, you do not pay any rent, you have access to a garage or similar) and to some real bargains regarding old bicycles sitting in your neighbors basement/garages/etcetc, then at least you can have the scale-savings related to parts ... but you still miss the time-savings of doing it full time.