A new plan

My end goal in the car industry is definitely to be a retail dealer but I may need to adjust my sights to help me get started.

I may have to become a wholesale dealer for 6 months while I test my theories and try to make a little money to pay for my bond and more expensive office location.

Wholesaling is very interesting to me. I have a CarMax close buy where they have auctions every two weeks. I have heard of people buying cars there and just driving them 2 miles to Manheim and selling them there for profit.

Beyond this flipping strategy I'm more then willing to put a little money into painting and having light body work done on a good low milage car. The idea is to buy a car with light body damage or just bad paint and spend $500 or so fixing it up and then resell the same car at the auction.

Target income should be $500 or so a car. I think that this is possible. With $10,000 I could buy 3-4 $2000 cars and still have enough capital to do repairs. Do this twice a month and you sell 8 cars for about $500 profit....= $4,000 a month. If I could do that for two months I could pay for my retail bond and the office space that I want. Better yet do that for 10 weeks and I could double my money. Of course it probably won't be that easy.

Here in Arizona the state requires retail dealers to cary a $100,000 bond. But if you are a wholesale dealer it's only a $25,000 bond. In addition there is some flexibility for the office location.

Once I get the retail license I can continue to wholesale and add in some retail for those cars that I get at a really good price. I like the idea of being a wholesaler because it's a clean transaction. I would be more then happy to make $300 on a wholesale transaction then $500 on a retail one. It's one day. I can schedule when I sell the car. I don't have to deal with dozens of test drives and I think that it's just nice to not have to deal with a lot of people. I do want the retail license though because it would be nice to sell to friends and family. I think that it would pay for itself every year.

What do you think?

Phil

Dealerlicense.com Update!

I bought a book package from Dealerlicense.com and received it today. First off I have to outline a few of the best things about the transaction.

1. Awesome communication. I asked a question and James responded same day.
2. I bought the package and it was mailed the same day
3. Shipped Thursday and I received the books on Monday!

I don't know how many of you buy instructional material online but I have and about 75% of what I buy turns out to be crap. Not only that but it's often being sold by someone who stole the info and doesn't want to be contacted because my $60 is paying for their margarita and permanent residence(read Hammock) on the beach somewhere. None of this is the case with James' packages from dealerlicense.com. I haven't been to his offices but the fact that he invites people out and posts his address is refreshing.

The website looks a little dated, but it's easy to navigate and the info is clearly presented. I enjoyed the "free e-book" snippets.

The shopping cart worked well and I had no issues with the transaction.

Call me old fashioned but it's actually refreshing to buy some intellectual material online and then receive it in print format. From the picture you can see the 11 books that I ordered the 2 CDs and the 2 DVDs. The books are bound well too.

I read Secrets of Licensed Used Car Dealers, Dealer Agent Programs in Depth, How to Get Your Dealer License, and eBay Profits. All contain original material that is presented in a clear way. You can tell that James spent some time on each book and he generally doesn't repeat material from book to book. Most importantly the information is VALUABLE and applicable.

I watched both DVDs today as well. The Dealer Auction Tour was great and explained a lot of the details and the process to expect. I've been lurking around the local Mannheim auction trying to talk my way in for a couple of weeks now so I had a pretty good idea what to expect on this DVD but it's refreshing to have my impressions supported.

The Car Inspection DVD is really good too. I'm not a complete idiot around a car and know what to look for( one of my favorite pass times is to torment used car dealers by pointing out overspray and poorly matched paint on cars that they say have never had any work done. Karma may come back to bite me there...) The DVD is detailed enough for those who don't know anything but fast paced enough for the experienced car guy. Most importantly James explains the markings on the windshield of cars sold at auction and thus what to look for. For me this was most valuable.

The resource CDs worked well and it looks like they have a lot of great tools on them.

All in all this is the best instructional package that I've ever purchased online. I love that it came in print format! James is strait up about all the grey areas of the business and clearly states what is legal, what isn't and why while suggesting that you make your own decisions. I love how down to Earth the presentation is. In an industry that is dominated by fairly grumpy people who don't want anyone new to come in and mess things up for them and regulated by government agencies who take 6-8 weeks to do a background check, it is refreshing to have a mentor with a positive attitude. That's what you get at dealerlicense.com, with the email and phone support that James offers you truly get a mentor to help you through the process of getting your license and getting your company off the ground.

I'm not an affiliate and I don't get or want anything for this review. It's a great package and answered almost all of my questions that no one else would answer. Those quesitons that the package didn't answer I sent to James and I expect his response will be just want I'm looking for.

Phil

Dealer Agent/Dealer Co-Op UPDATE

I just found out that the Dealer Co-Op deal is technically illegal.

It isn't illegal for the dealership to offer the services but it would be illegal for me to participate in showing and selling cars here in the state of Arizona while representing a dealership in California or Texas. You have to show the car/sell your car/complete the paperwork from your place of business in the state of AZ.

This is where people have gotten in trouble in the past. They show the car and barter the deal somewhere other then a dealer lot and it's then illegal. It wouldn't be an issue until someone got mad and went to the Dealer Complaints Department with the state...

It's my understanding that there are two important principles at play here.

1. Where is the car shown to the customers/ Where is the price negotiated?
2. Where is the paperwork completed?

The Co-Op that i was looking into took care of #2 by forcing all paperwork and titles to be done at the dealership. The hope is also that this shows the DMV that the customers were actually there. But at some time in the transaction the customer has to sign the papers and that needs to happen at the dealership or via mail correspondence. Not at the corner drug store. This is where Ebay and other online auctions get a pass. The car is presented and sold from the Dealer at their place of business. The pictures are often take of the car at the Dealership. The paperwork for licensing is completed and the car is shipped when funds are verified. The Dealers agent doesn't meet with the buyer at their home to complete the paperwork and doesn't drive the car across the state line to show the potential buyer.

This is all a grey area in the law but I've read about people getting sued and even spending time in jail over this. Now Tim says that these people broke the rules. Yeah they probably did but I would have no legal foot to stand on if I made a minor mistake either. All it would take to have a really bad day is to have one customer complain and then the state prosecutor would get involved.

So back to the drawing board.

I'm going to keep looking for ways to make getting a license and starting this business a little less expensive but for now this is getting pricy.

Did you know that Arizona is one of the most expensive places to get licensed?

We're one of the only states that require a $100,000 bond. Man did I pick the wrong place to do this...