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Old 11-03-10, 08:24 PM
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I've bought several bikes on Craigslist for really cheap, use them for a bit, then sell them for some cash.

First thing I usually do is change out all cable housings and cables. Fresh cables not only look good, but make the bike perform a lot better. I get cables and housing very cheap at the place I work ($1 per cable, $1 per foot of housing). However, I think you can get cable sets for under $25. They usually come with the cables, housings, and some ferrules.

After that, I make sure the bike is set up properly. This involves having the drop bars rotated at the right angle, the brake levers position correctly, the stem height adjusted properly, and the seatpost/seat. Lastly, I make sure the bike is clean.

After that the bike should be good unless it needs some new parts. I like getting new bar tape, because it makes the bike feel and look good. New tires are often needed as older bikes have dry rotted tires, which are a bit unsafe to ride on. I usually don't replace the chain unless it's really bad or rusty. On my commuter, the chain has stretched a lot, but works fine. I'll wait until it breaks or looks like it's going to break.

Oh, I often repack and change the bearings in the hubs and bottom bracket. This make take some tools you don't have along with some time.

I've gotten pretty good at overhauling old bikes. It takes about 2-3 hours to clean the bike, change out all cables, setup the bike properly, and repack the hubs and bottom bracket.
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