Are you a car nut? Do you get excited about horsepower and thoughts of an open highway? If you have a passion for cars then you may be able to turn your love of speed into a money making income stream.
I know a few entrepreneurs who buy and sell used cars for extra income. The cool thing to me, is that not one of them owns a car lot or has any employees to manage. The basic business model is to buy cars in good shape at auction and then to sell them for a modest profit. Let’s take a closer look at what this business entails…
Do you need a license?
The people I know who are doing this all have used car dealer licenses. I did some research into this to see if a license is necessary. Basically regulations vary by State but in New York, for example, you need a license if you sell 6 or more cars per year. Check out your State’s DMV website for details on obtaining a license, requirements, and etc…
The application fee is around $40 and you must also pay a 2 year business fee upfront of $450. If you want to sell boats, it’ll cost you another $50.
When you look at the costs involved it’d be tempting to skip the license and not sell more than 6 cars per year to keep it legal. The problem with no license is that without one you can’t get into the dealer auctions. These auctions are where dealers buy cars to sell on their lots. They buy them at a wholesale prices and sell them on their lots at a marked up price. With a license you have access to the very same auctions as the big boys.
How do you sell cars without a lot?
So you’ve obtained your license and you just bought a car at auction. Where do you sell it if you don’t have a lot? The people I know doing this sell their cars in a variety of ways, such as –
Craigslist
eBay
AutoTrader
Word of Mouth
They also sell their cars on local car lots. When the car is sold they pay the dealer a percentage.
Here’s a possible way to try this out and see if it’s a good business for you…
So to get into the best auctions it looks like you need to spend at least $500 on the license. I’m sure there are more upfront fees like insurance. That’s a lot of money to spend on a side business that may or may not be for you.
Here’s what I’m thinking –
Get the license. Initially use your ability to get into the auctions as a way to buy cars for yourself, your family, and friends. Find out what they’re looking for and get it for them at a price better than they could get at a car lot. If possible, take them with you to the auction so they can look the car over and can pay the auction house. That way there is no money out of pocket for you.
Since these initial transactions will be for family and friends don’t expect to make a big profit. Discuss a predetermined amount with them prior to making the purchase. If you made $500 of off one transaction you’d be well on your way to paying for your license and other expenses.
Once you’ve made a few sales to your friends and family use the money to buy a car that you can flip for a good profit using some of the ways listed above. It seems to me you’d find out pretty quickly if this is a viable income stream for you. If not, move on to the next idea.
I definitely see potential in this income stream. One transaction a month could be a nice little revenue stream. Who knows, if you find you have a real knack for this it could turn into something much bigger. I love income streams that can be started small with a big upside. This one definitely fits the bill.
Thank you for checking out this article.
Enjoy the Chase!
Matt