Anybody here buy/sell cars?

M

mcc

New member
Well, I just had an interesting opportunity come up. I came across a guy that has a very small car lot. Actually, he doesn't even use it from what I can tell, but in our state you have to have an actual lot in order to get your dealer's license, so he rented one. He just wants someone to split the lease with him, which would run me about $280/month. My initial thought was to use it as a fixed location and do some combination of fixed/mobile and see what I could work out. However, after looking at the place today, I don't think it would bring me much business. The road it is on has a bunch of other auto places, such as auto glass, body repair, mechanics, etc. There are at least a couple of each of those places. At the end of the block is a car wash. The garage appears to be in good condition, but it is set back off the road behind a house that was converted into office space.



So, although the garage itself isn't a bad little place, the location seems to suck. Nobody would even know I was there unless I put out a sign in front closer to the road, and I don't know how effective that could be.



That leads me to a few possibilities. First, I could go around to some of the other auto related businesses, and even the offices and such in that little business district, and see if I could drum up some business that would flow my way.



Second, and possibly more intriguing, is the opportunity to work with this guy selling cars. He has a license and experience, and he is willing to let me use his space and work under his license. I may be able to learn the ropes from him. He at one time owned a very well known tax service, but he sold it and now he has a small accounting firm. He dabbles in cars very part-time, but he is still selling 4-5 cars a month at a profit of around $1,000 each. So, I could learn from him, and all I would have to do is share rent of the space with him, which could potentially bring me a little detailing or washing business as well.



What do you guys think? Do any of you sell cars, and if so, do you think this might be a good opportunity to learn the ropes? Any suggestions or advice is appreciated, as I'm not exactly sure what to think.



Thanks for any input:up
 
I have owned a small dealership.



People such as the guy you're talking with tend to do pretty well once they know the market and have some business sense about them.



Selling at such a small location is very different than the big/franchised dealerships and it can be interesting. JUST selling leaves a great deal of down time. Some days...many days, you won't have a single customer if his volume is 4-5/month.



Would you invest in purchasing inventory yourself or strictly maintain and sell his inventory?



Incidentally, not sure how much detailing business you do now, but a fixed location for that little amount would be nice. You might be able to drum up some business from the other auto-related businesses nearby. Depending on what you do, one or two details could cover your half of the rent, leaving the rest for profit potential :soscared:
 
mcc said:
Well, I just had an interesting opportunity come up. I came across a guy that has a very small car lot. Actually, he doesn't even use it from what I can tell, but in our state you have to have an actual lot in order to get your dealer's license, so he rented one. He just wants someone to split the lease with him, which would run me about $280/month. My initial thought was to use it as a fixed location and do some combination of fixed/mobile and see what I could work out.



Thanks for any input:up
Click to expand...



To me it seems like a decent deal as it gives you a place to detail when the weather is bad and the cost at $280.00/month is very cheap. It could also allow you to pick up a car or two along the way to resell them and make some additional profit and could list the vehicles on craigslist.
 
mcc said:
Well, I just had an interesting opportunity come up. I came across a guy that has a very small car lot. Actually, he doesn't even use it from what I can tell, but in our state you have to have an actual lot in order to get your dealer's license, so he rented one. He just wants someone to split the lease with him, which would run me about $280/month. My initial thought was to use it as a fixed location and do some combination of fixed/mobile and see what I could work out.



Thanks for any input:up
Click to expand...



To me it seems like a decent deal as it gives you a place to detail when the weather is bad and the cost at $280.00/month is very cheap. It could also allow you to pick up a car or two along the way to resell them and make some additional profit and could list the vehicles on craigslist. A small wholesale car dealer use to lease a shop next to my dad's auto repair shop and would wholesale the cars and occasionally advertise a car in the paper. With an actual lot it would make it easier to retail the cars rather than having to wholesale them through the auction.
 
All this talk about cars for sale and lots makes me miss that business a little bit.



I'm trying to find a reasonable car to drive during the winter months so I can put away my summer car...the one that just started giving me mechanical fits. I postponed another purchase I was considering to fix the one I thought was repaired.



Wholesaling cars can bring some nice results. Many people have a lot with some cars on it, but rarely sell to the public since they have a lot of connections with other dealers. They get a car, prepare it for sale, then get a call from some other lot instead of a retail customer. Not as much profit, but much simpler
 
DO IT!!!!!



280 a month....thats only 2 cars or even 1 and the rest of the month is profits...



plus you have his cars to detail if he likes your work

you have lots of business opportunity with all the other auto business that dont offere detailing...you can get in with the owner of those places to sell your services to their customers for a small fee, or a free detail of their car (costs you next to nothing)



I am still looking for an opportunity like that for myself...I think I just need to get out there and promote myself in that sense...seems like the more I talk about my business, the more business I get...go figure!!!! LOL
 
Inside info...I guess:



Used Car Dept: pays all of your dealership bills, generates $50,000 to $60,000 per month in profits.



New Car Dept: waste of real estate. We only use the franchise name to draw in customers for financing and used cars. Finance reserve pays your home bills, typically $12-15k per month.



Parts: generally a waste also, covers its bills, generates $10-15k of profit per month, if run properly. A manufacturer wont sell you a franchise without crippling you with a ridiculous parts quota.



Service: decent return. Way too much work. More effort than new cars. Generally $20k of profit per month. But generates 90% of agita and anxiety.



Body Shop Dept: Cash cow. Super high initial investment. Great annuity return, typically $20-25k per month in profit. $1 million up front gets you $250k per year in profit. Better than real estate or the stock market.





These numbers were from the late 90's early 00's. I don't know how the business is now. I will tell you, you can lose your shirt if you don;t know how to buy cars. Thats the formula, buy well, the rest will fall into place.
 
I was thinking this was probably a pretty good opportunity, and you guys seem to back me up for the most part.



PRB- In answer to your question, I would like to buy inventory myself and sell it. Additionally, I would be glad to handle his inventory if he would like me to. Right now I just want to learn from him, but he is making money now, and I think I can learn from him on the purchasing end.



It looks to me like he doesn't really have any cars on the lot at all. He parks them around in high traffic areas or just sells them online. Even if he did have them on the lot, it is doubtful anyone would see them because the location is set back behind another small office building.



JSatek- You say that it is a long road to profit. If this guy is currently buying and selling 4-5 cars per month, at roughly $1000 profit per car in his spare time, then how is it a long road to profit. The lot he has is rented by him for $560/month, and he doesn't really even use it much at all. So, there aren't many utilities either. It seems to me in that scenario that profit is easy to come by. Am I missing something? Please explain.



I would just buy cars under his license and split the cost of the lot with him. For doing so, he would teach me the ropes somewhat, and I would get use of the garage if I wanted. I can buy and sell them, detail them myself, do minor things like changing oil and such, and I have friends that are mechanics. So, I think I have most of the bases covered, but I know that there is always something that goes unaccounted for. I'm trying to figure out what that is.



Thanks for all the input so far.:2thumbs:
 
jsatek said:
Inside info...I guess:



Used Car Dept: pays all of your dealership bills, generates $50,000 to $60,000 per month in profits.



New Car Dept: waste of real estate. We only use the franchise name to draw in customers for financing and used cars. Finance reserve pays your home bills, typically $12-15k per month.



Parts: generally a waste also, covers its bills, generates $10-15k of profit per month, if run properly. A manufacturer wont sell you a franchise without crippling you with a ridiculous parts quota.



Service: decent return. Way too much work. More effort than new cars. Generally $20k of profit per month. But generates 90% of agita and anxiety.



Body Shop Dept: Cash cow. Super high initial investment. Great annuity return, typically $20-25k per month in profit. $1 million up front gets you $250k per year in profit. Better than real estate or the stock market.





These numbers were from the late 90's early 00's. I don't know how the business is now. I will tell you, you can lose your shirt if you don;t know how to buy cars. Thats the formula, buy well, the rest will fall into place.
Click to expand...



I think you're getting well beyond what the OP had in mind. He's looking at a small lot with a garage to do some detailing and possible minor repairs and maybe sell a few cars, not a full fledged car dealership.
 
Yeah, I'm not looking to open some huge dealership, just sell a handful of cars each month.



Anyway, I've talked further to the guy, and relayed my concerns about the location (even though the price is great). He offered to let me buy and sell as an agent under his license, and I don't even have to rent the garage if I don't want to. Now, I'm still going to look into that, but right now I'm 100% mobile, and that may be where I stay. It would be nice to have a garage to detail in, but the location isn't near many of my customers, the car lots around there all have garages that I could use if I decided to do dealer work (which I don't think I want because they won't pay anything), and I can do invidual customers wherever they are anyway.



If all goes as planned, I'll be going to my first auction this Thursday. He says that he typically pays $1500-$2000 for a vehicle, and sells them for about $1000 or so more. Does that sound right to any of you former car salesmen? Any tips for going to the auctions?
 
I have a shop in Orlando I run with my father. We do detailing, light car repairs, and auto sales. If he is letting you run as an agent under his license, DO IT! Make sure you know your states regulations and be sure to know how to complete all the paperwork.



The first week or two that you go to the auction jsut stand back and observe. Learn the pace of the auctioneer, the light system, and most importanyly the sales price of vehicles. Also don't just go to one auction, go to a few. Each auction has different markets and find one that fits you. Some auctions like Manheim have website that show you the sales from prior auctions. They also have a market report which gives you the average wholesale price of vehicles based on sales.



Also get ahold of the books. Trade in, black book, gold book, etc.



What about your funds? Do you have enough to buy one car or a few? If not see if this guy has a floorplan with the auction and if he will allow you under it. This allows you to buy vehicles under credit for a fee of $80 pluse interest. You will be looking at no more than $200 for the fee plus interest.
 
Thanks for the info jeteast99!!



Can you explain further about this "under" process? Would he have to okay me to buy on credit like you are talking about? If so, what would his risk be since I'm working under him? My feeling is that he kind of wants to keep us separate, as he is doing a nice thing by letting me work as an agent on his license.



It sounds like you know a bit about the auctions. Any other advice would be welcomed.



Right now I could go buy at least one car, possibly two, depending on what price range I go in. He said that a $1500-$2000 car brings an additional $1000 when he sells them. That kind of minimizes the risk somewhat. I'm just worried about buying a piece of junk, because I've heard that some of the sellers are crooks. I won't take kindly to someone bilking me out of my hard earned money.
 
Yes he would have to authorize you to be under his credit with the auction. There is very little risk inovolved for him, relatively. Once you buy a car under credit you normally have 45 days to pay it off. If don't sell it within that time, you put it back in the auction and try to get at least what you paid for. But try to avoid this because remember you have to pay all the fees involed. First you have the buyers fee which will be around 130, then the administration fee which is 80, interest, and the sellers fee which is the same as the buyers fee.



Try to avoid selling a car at the auction. It is much easier to set up a dealer account with autotrader and sell the car for a cheap price.



But if you do decide to sell cars at the auction, make sure you call a few days before the auction to get your run numbers as low as possible. The run number is where you car is placed in the auction and you want it low as possible because you want as many bids as possible. When the auction begins there are many bidders but as time goes on they leave as they are out of money or credit and if you are at the end of the auction you will not recieve high bids. An example of this is I had a 99 explorer that i put in the auction at the last minute. While waiting for my time to go up I saw a 99 explorer go for $2600. Now when i went up my explorer went for $1800 which i declined. Now my explorer was in much better condition then the other and didn't have one of its windows busted.



Before the auctions start go the lot and inspect the vehicles. Drive them around. Dont have any surprises when you bring it back to the lot.



When you detail the cars don't spend too much time on them. Polish, glaze, wax. Get something for the black trim as well. Restore headlights if needed as well
 
The $1000-$2000 cars can pay off, if you can buy them right. We have so many "buy here-pay here" lots that $2000 cars cost you retail money at the auction. The BHPH lots will scoop up the lower cost cars, recondition the heck out of them, and sell the car through one of their programs.



People tell me it's due to the excess profits those types of operations make (meaning they can spend more per car), but I say it's partly due to dumb dealership buyers. I used to wholesale to some of those guys and they would pay STUPID money for junk.



Back to buying cheaper cars right: know your stuff. Know the basics of mechanical diagnosis. NEVER trust a seller at the auction. They'll try to rip you off as badly as they will a retail customer. Jeteast99 said to go to the auctions and just watch for a few weeks.



Great advice: learn who the snakes are. Watch how the bidders work against each other. Watch for the guys who bid up cars for each other. One of our auctions had "ghost bidders" ... the auctioneer would just look out, point at someone and then go on to the next high bidder.



When you're buying cars, try to specialize in something. Narrow your focus. Either it's price or style or a particular brand...just develop some knowledge in an area and roll with it.



As an example, in the late 80s and early 90s there was a dealer here who called himself "Escort Mike".

Mike only sold Ford Escorts and Mercury Lynx. Mike made a good living doing it, too. He knew those cars inside out and passed on knowledge and good buys to his customers.
 
Thanks for the great advice Jeteast and PRB. The guy I'm about to start working with gave me login information to the local Manheim auctions. I was looking at those $1-2k cars and then I checked them against ebay ending bids for completed auctions. I'm not necessarily thinking of selling on ebay, but I think it could be a good guide as to what people really pay for things sometimes. I was surpised to find that some comparable cars would sell cheaper on ebay than the local dealer auctions. Now, cars likely differ in value in different areas, much like some areas afford much higher detailing prices than others. It was surprising at some of the results though. I guess it only takes one or two though, and if you could get them at the right price, you could make good money.



I just assumed that many of the sellers were likely shady businessmen. I'll be sure to note who is who when I go watch the first time or two. I have a lot to learn, but I'm researching as much as I can and taking in everything you guys say.



"Escort Mike" sounds like he does something else other than sell cars. Thats funny.:lol



I'm not sure what my niche will be yet, but I'm pretty sure it won't be Escorts.
 
The real key to success in that business is buying the cars right. They aren't just sitting around waiting for you to come along and buy them, you have to be creative and hunt for them. You also have to know what they are worth what is wrong with them, and how much it cost to fix them BEFORE you reach into your pocket.



Jeteast: You are a trusting fellow. I would never let anyone go to the auction under my license. If the guy gets a car, and doesnt want it after he bids and wins, I as the licensed dealer, am stuck with the car. IF I didnt get him into the sale properly, I could be banned for a month or maybe thrown out of the auction. I have taken people to the sale for a $500 fee, bid on what they wanted for them, I'd take all of their money up front and deposit it in my business checking before we would go anywhere. This way they know, all sales are final, its not my decision.



Credit? On a $2000 car at the sale? I dont know about Florida, but the "dealer express" lane in the NY/NJ/PA auctions has some of the worst cars that ever rolled on the face of the earth. These are the worst junks that the lowest wholesaler on earth couldn't unload to a credit criminal. I'd stick with the Bank and Manufacturer only lanes and bid on cars only with some remaining factory warranty.



Get yourself a subscription to Galves, Blue Book, Black Book, and NADA so you get an idea of what things are going for. Also ask your dealer friend to give you a copy of the auction reports. These will let you know what things are REALLY selling for and what is over book and under book.



Find a wholesale mechanic and body shop, run some repair scenarios by them to get prices so you can bid accordingly on the cars. Always beat them up on the prices, they will always negotiate repair bills, and there is always another mechanic to use.



This may seem lengthy, but there is only one way to do things when it comes to money, the right way. You can be a fart in the wind and maybe sell 2 cars and make a few bucks, or you can build a lifelong business.





PRB has got it right, read his post also.

I was "Highline Justin" for a while, then Export Justin as I sold cars in Puerto Rico and Germany.
 
Well, I'm going to my first auction tomorrow. Well...........sort of. One of the local auctions has an "after sale" where the vehicles that didn't sell for whatever reason intially are sold. The guy I'm going with says he likes it better than many of the actual auctions because the cars can all be driven around, and the sellers have to list an asking price, kind of a minimum bid for the vehicles. They have a contact there that tells them whether or not a certain seller may be a little shady, and they have excellent success there. So, it isn't technically an auction at this point, but they get some very good deals there. We'll see how it goes.
 
Another thing to remember at the auction is that each car is run through for 60 seconds. You have 60 seconds to make a decision, calculate repairs, figure a profit, estimate the market, and pull the trigger.

You don't get to drive them around and look at them for 2 hours and then say, "no, Ill think about it". You can go early and inspect them as they are parked in the lot waiting to be driven through a lane. IF you end up with a total piece of crap, and its not red lighted, or sold AS-IS, you could arbitrate it and maybe get out of it or renegotiate the sale price.



I used to go 2x per week for about 8 years.

I always go with a detailed list:

What cars I need.

What I can sell them for.

What I can finance them for.

What they are in the various books for.

What they sold for at previous auctions.

What number and lane the vehicles I need are running in so I can be ready to jump.

Who is going to transport them home and for how much.



Sometimes you randomly find something unique that you can sell, but to go totally unprepared is just an exercise. But keep in mind, the auction is not the silver bullet. Finding a car at a local garage, body shop, or in the newspaper always ends up a higher gross than the auction cars. Customer trade-ins are the highest grossing deals at a dealership.

Think of this: I used to get about 15 trade-ins per month at my Cadillac store. Those 15 cars were either sold on my lot for a minimum of $3,500 profit or sold at the auction for a minimum $2,000 profit minus fees.



After-sale and pre-sale are good, but those are the roaches. Proceed with caution.
 
Very interesting and informative thread.



Flipping cars is not something that I do often. Usually a 'project' for the winter months.



Nonetheless, I appreciate the insight and information. I look forward to more...



As to the 'roaches', I've always wondered why a decent car would go to auction in the first place.



Jim
 
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