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What is involved in starting a used car lot?
Posted on 4/11/15 at 11:36 pm
Posted on 4/11/15 at 11:36 pm
I'm talking about the small car lots, like 20 cars and a small portable building that the owner is hardly ever there. I see those popping up and was just curious. Would someone with little car sales experience be able to learn and handle a lot that is small like that? For say, 15-20 cars, $40,000 be enough capital to start something like that? Is it pretty difficult to get liscensing and certifications for it? Just thinking about adding a little side business. My FIL sells cars but is about to retire and hates discussing it. He has always worked for big dealerships and is way past burned out. I just want to sell some cars here and there and bring in a little more income.
This would be in Louisiana in an area with approximately 50,000 people. When I say little car selling experience, I really mean none. I have a lot of sales experience, just not with vehicles. I would be happy making a 15-30,000 $ profit a year from it or am I way off on expecting that. Would a lot that size make way more or way less?
Eta: The $40,000 is liquid, I don't really want to borrow any money.
This would be in Louisiana in an area with approximately 50,000 people. When I say little car selling experience, I really mean none. I have a lot of sales experience, just not with vehicles. I would be happy making a 15-30,000 $ profit a year from it or am I way off on expecting that. Would a lot that size make way more or way less?
Eta: The $40,000 is liquid, I don't really want to borrow any money.
This post was edited on 4/11/15 at 11:44 pm
9
Posted on 4/12/15 at 12:01 am to windshieldman
It's an ages old debate. Like the chicken or the egg discussion. Some people think you start with used cars. Some say you need a lot.
I'm not sure whose right...
I'm not sure whose right...
Posted on 4/12/15 at 12:03 am to windshieldman
That seems like a big pain in the arse for $15-30k/year.
Posted on 4/12/15 at 12:06 am to Panny Crickets
quote:
That seems like a big pain in the arse for $15-30k/year.
I wasn't sure how big of a pain it is. I work 2 other jobs, but on my 2nd job I choose my own hours for the most part and don't mind cutting back some.
Posted on 4/12/15 at 2:33 am to windshieldman
Friend of mine started one a few years back.
He got into the business flipping an easy sell (Hondas, Toyotas, ect.) a month at a time by buying them off his father-in-laws license. Essentially, he went with his FNL to the auctions and would give him the cash to purchase the vehicle.
The profit came so overwhelmingly easy for him that he continued this for about a year, gradually buying more and more.
He evntually decided to open his on lot in a market that was virtually untouched in a rural parish just outside of EBR. He found a partner and continued to work his full time job for about another 2 years before finally resigning last month and committing himself to it full time.
From what he tells me, he has done well. He said during tax season, he doesnt have to even haggle on the sticker prices. The market he targets can't get rid of their income tax refund quick enough.
Needless to say, I now refer to him as The Credit Clown.
Good luck.
He got into the business flipping an easy sell (Hondas, Toyotas, ect.) a month at a time by buying them off his father-in-laws license. Essentially, he went with his FNL to the auctions and would give him the cash to purchase the vehicle.
The profit came so overwhelmingly easy for him that he continued this for about a year, gradually buying more and more.
He evntually decided to open his on lot in a market that was virtually untouched in a rural parish just outside of EBR. He found a partner and continued to work his full time job for about another 2 years before finally resigning last month and committing himself to it full time.
From what he tells me, he has done well. He said during tax season, he doesnt have to even haggle on the sticker prices. The market he targets can't get rid of their income tax refund quick enough.
Needless to say, I now refer to him as The Credit Clown.
Good luck.
This post was edited on 4/12/15 at 2:35 am
Posted on 4/12/15 at 6:56 am to windshieldman
I know a couple of people who are in this type of car business. Heres my perspective:
Both of them generate the majority of their revenue from finance activities, they buy a 3000 dollar car but may collect 7k on it over a couple of years. They put GPS's on the cars and may sell the same car 2-3 times before its off the books.
One of the guys has 300-400 cars on paper at a given time, half of them are over 2 weeks behind, yes they pay by the week. His model is so that he does not ever want to sell a car cash because the money is in the terms.
If you just want to flip cars and make 30k in a year you can do this on ebay\clist without having to saddle yourself with overhead. The juice is not worth the squeeze to run a lot for a couple grand per month. The guys I know in this business are clearing what you want to make annually in a month, however they treat it as a full time business and have been at for a while.
Both of them generate the majority of their revenue from finance activities, they buy a 3000 dollar car but may collect 7k on it over a couple of years. They put GPS's on the cars and may sell the same car 2-3 times before its off the books.
One of the guys has 300-400 cars on paper at a given time, half of them are over 2 weeks behind, yes they pay by the week. His model is so that he does not ever want to sell a car cash because the money is in the terms.
If you just want to flip cars and make 30k in a year you can do this on ebay\clist without having to saddle yourself with overhead. The juice is not worth the squeeze to run a lot for a couple grand per month. The guys I know in this business are clearing what you want to make annually in a month, however they treat it as a full time business and have been at for a while.
Posted on 4/12/15 at 7:47 am to misterc
The financingmismdefinitely where the money is, but that means it requires a lot more expertise than just flipping cars. If I were trying to do this, i would hire someone with experience to run it for me.
Posted on 4/12/15 at 11:53 am to The People
quote:
The People
I feel like we know the same person...
Posted on 4/12/15 at 12:42 pm to burgeman
That's just the business model. It's the same from coast to coast. I have seen a lot of them.
Some call it predatory, but it's very easy to lose money in that business. The people who are excellent at make a fortune, but many go bankrupt in a hurry.
Some call it predatory, but it's very easy to lose money in that business. The people who are excellent at make a fortune, but many go bankrupt in a hurry.
Posted on 4/12/15 at 12:57 pm to TheHiddenFlask
Yea, again it would be max 20 cars, probably 10-15 at first. I wasn't sure about liscensing to sell cars like that. I know my FIL has to take test all the time but he works at a big dealership. I'm not wanting a full time job out of it. Just wasn't sure how to get involved legally, amount of paperwork, and time with buying and selling for a very small lot. Lots of good advice here, thank yall. Again, like I said in OP, FIL hates discussing it, which is why I'm asking here 
Posted on 4/12/15 at 1:01 pm to misterc
quote:
Both of them generate the majority of their revenue from finance activities, they buy a 3000 dollar car but may collect 7k on it over a couple of years. They put GPS's on the cars and may sell the same car 2-3 times before its off the books.
One of the guys has 300-400 cars on paper at a given time, half of them are over 2 weeks behind, yes they pay by the week. His model is so that he does not ever want to sell a car cash because the money is in the terms.
I've often wondered if anyone actually ever pays off the loan, or, they just pay for a while, lose it, repo, and then sold and begin again.
Also, are their prepayment penalties when they finance these cars?
Posted on 4/12/15 at 1:13 pm to burgeman
Ill charge you a consultant fee and get you started
Posted on 4/12/15 at 1:59 pm to Coach Guidry
Coach Guidry, what area of louisiana do you work?
Posted on 4/12/15 at 6:25 pm to windshieldman
You should make a good pop on each sell. The trick is to buy them right. Just cause it's an auction doesn't mean the price can't be too high to turn a nice profit. They also are as is from the auction. You have to be able to tell a solid car from a bad one AND get it at the right price.
Financing is easy now. You just line up a few companies and enter the deal into the system to get an answer.
You should be able. to make 100k per year selling 4 or 5 per month.
Who will work the lot?
Financing is easy now. You just line up a few companies and enter the deal into the system to get an answer.
You should be able. to make 100k per year selling 4 or 5 per month.
Who will work the lot?
Posted on 4/12/15 at 6:48 pm to windshieldman
For starters you will need more money. If you've got 40k and want to have 20 cars you'll have to have an average cost of 2k, which means your cars will be POSs. If you're trying to sell decent retail vehicles a good average cost target is about 15k. It's gets difficult trying get get quality cheap cars. Which then leads to reconditioning. Most all the cars you'll get will need work to make it retail quality. So you'll need some money for that too. Also you'll need to know how to value a vehicle when you are acquiring the,. Paying too much for the wrong vehicle will loose you money. There is more to it than just looking at a book. Then you'll need to merchandise them online, which will cost some more money. There is more you'll need, but that's a starting point.
Posted on 4/12/15 at 7:00 pm to GeeOH
quote:
Who will work the lot?
Well I'm not sure. The few I see that have popped up nobody is ever there. Just a phone number on signage. One of them I do their glass work and have been for months, I've yet to see him in person
He just mails me a check. Guess I was thinking I would be there on days off or they could just call me? I'm not really sure yet Posted on 4/12/15 at 7:04 pm to TigerSaints318
Maybe I'll start with 10-12 cars and build up. All very good advice, actually, great advice in this thread. Thank y'all
Hopefully my FIL once he retires in a year or so will be willing to help some after he gets a break from retirement. He loves to stay busy so I think he will warm up to it b/c I can somewhat get a feel for worth of vehicle but probably not like these guys that do it everyday. Hopefully the amount of cars I would have I couldn't lose my arse to much.
Hopefully my FIL once he retires in a year or so will be willing to help some after he gets a break from retirement. He loves to stay busy so I think he will warm up to it b/c I can somewhat get a feel for worth of vehicle but probably not like these guys that do it everyday. Hopefully the amount of cars I would have I couldn't lose my arse to much.
Posted on 4/12/15 at 7:16 pm to windshieldman
How long of a crack can you fix on glass? I have an Acura that a rock hit and spread to about 10+ inches last week
You may not have to work there, but you need to be able to get there and let them drive them. (or someone does)
You may not have to work there, but you need to be able to get there and let them drive them. (or someone does)
Posted on 4/12/15 at 7:44 pm to GeeOH
Have you considered just flipping cars on CList or eBay? I'd start there, and the money is there. Very passive involvement too.
I've considered this many times.
I've considered this many times.
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