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
Your plan is quite attainable. At least you have a good sense of the reality surrounding car dealerships. A good businessman needs to have a course of action, a working knowledge of how to execute those plans, a back-up plan, and an awareness of all the codes regarding the establishment of a business in his locality, all on top of short-term and long-term goals. Good luck with your car dealership!
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Did you get any further with this? I've looked at all these same options and curious how it turned out for you.
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