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Smart Shopper Buy Here, Pay Here
328 messages, Last post on Jul 19, 2009 at 7:42 PM
You are in the Smart Shopper Forum. Your Hosts are kirstie_h & tidester
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from high school started this in 1988, after several weak years of working at the mom and pop Ford store that we both worked at in high school. He's now worth $4 million in readily available assets and is getting ready to partner with the Don Davis Auto Group (I used to work for them). I'm positive that he'll keep his 4 BHPH lots going - be stupid not to. |
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Hmmmmm....what are upfront costs like? Plenty of vacant Wallyworlds and supermarkets around here. How hairy is the paperwork involved? Hmmmmm...methionks I'll do a little internet research. Turboshadow (of Turboshadow's BHPH!!!)
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you need, I'm thinking, about $50,000-100,000 if you want to start strong, much less if you don't mind whining and worrying. You need a dealer's license for your state, whatever insurance is required to go along with that, a good eye for used cars that'll last at least 2 years after you buy them, and won't require major costs at breakdown, a place to do business, a software program for running contracts and DMV paperwork, a lawyer, and a good mechanic, if you're not one... My buddy started out small with 4-6 cars...I think I would start out stronger with 15-20. |
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I wouldn't want any part of it. These are called "Pot" or "Note" lots and they operate just like driftracer said. They buy the cars the big dealers don't want and sell them to people with rotten credit. By misfortune or by being deadbeats, these lots are the only places these people can buy cars. Two days late on a payment and the car gets popped and the process starts over. I heard of a guy with a BHPH lot that actually had a sign on the wall in his office. " The best way for you to get back on your feet is to miss a payment". A necessary but dirty business. |
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Don't you run into a lot of registration costs? In NJ, they recently changed to a 4-year registration, so it costs about $350 to register a car now (at least a new one). Actually, I don't know if used cars are still 1 year, but that's still $80 or so, plus sales tax. Drift, how does it work on these repos? At what point is it a new sale, vs. just getting the same car back (I guess that means it stays registered to the same buyer). Again, I'm assuming that theses cars get registered to the buyer, otherwise I guess it would really be a rental! |
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At least, if you have to make a living at it right away... If you can don't have to draw income for awhile, you could probably get by with less.. I have a co-worker who has a used lot... But, he has to pass up a lot of deals that make good financial sense, because he doesn't have enough capital.. He can only afford to get cars from the auction, where they give him 60 days credit.. He has to turn and burn them, or send them back through the auction... I've seen him pass up great deals, because he doesn't have the cash flow to pay for a guy's trade-in. I bought a car from him for my mother-in-law... he had just purchased it at the auction the day before... She had a trade.. A perfect car for his lot (semi-rural blue collar area), but he couldn't afford to hold it.. He ran it through the auction the next day for a $200 profit, and I'm sure he could have made $1500-$2000 within a couple of weeks, if he had put it on the lot.. Most small businesses fail because of inadequate capitalization.... I think BHPH would be the same way.. |
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...those with credit problems are often careless about other things such as insurance and maintenance. Suppose some credit criminal crashes or trashes your ride? How can you sue him? He works as an apprentice french fry technician at Wendy's and his net worth is $14 and a record player. Driftracer, you play a BHPH dealer on TV? Is it for a Philly dealer and shown on a local station? If so, what channel so I can keep an eye out for it. I've been on vacation for the past few weeks. The TV commercials aired between Maury Povich and Jerry Springer are for places like the Cherry Hill Triplex along with those for trade schools, title loans, and accident lawyers.
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Replying to: turboshadow (Jan 04, 2005 10:05 am) BHPH lots that have been in the business for a looong time and have been successful usually have a little "Jingle" (I hope) in the Hip National Bank .. especially this time of the year, most are still looking for the payment from November .. also this market has changed drastically in the last 5/6 years .. the day of the "nice" $700/$900/$1,500 vehicle is kinda over, even if they purchase a semi-nice one for, lets say $1,200, a good store will have to drop another $300/$500+ just to make it seaworthy for the next 8/10 months .. that means to make a profit with a $1,500 downpayment, they need to be on the hook for $1,000+ just to break air ... that's why BHPH dealers are having the largest failure rate ever .. Drop 25 vehicles out there and your waiting for your profit, or at least your money back (or, just your original investment) for the next 4/6/8 months depending on the reliabilty of the vehicle - and thats if the vehicle doesn't cough up the air conditioner and the tranny doesn't go south in the next few months, then your back-pedaling just to keep the guy in the vehicle, or hook-it, then pay for the repairs anyway .. it can be a vicious circle, most dealers nowadays will settle for 30/50% of what they have in it, just to get it rolling ... It's easy to have $75,0/$150,000 just rolling around and not see a profit til' Easter, thats a long time to hold your breath because it's a big gamble .. and that doesn't count the property, lights, heat, mechanic time, paintwork, body fixes, parts, insurance, liability, city and county ordinances, advertising, taxes, titles, etc, etc, etc.com ...... Terry. |
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People with bad credit usually don't mend their ways. They also don't like getting their cars popped. It can get nasty.
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it was easy, or cheap, or effortless. I'm just saying that it's something I'm considering in the next 10 years. Broad strokes, as Terry put it, are appropriate here, simply because only a few here would understand all the intracacies and details, so a general overview was all I was trying to do. Stickguy asked about repos - first and foremost, I would be as humanly FAR AWAY from this area (PA/NJ) when this was done, I could care less what kind of hassles there are for registering in NJ...In either state I would be doing this business, the plates belong to the owner, not the car - your car gets repoed or totalled, the plates are removed and handed to you, the lender or insurance comapny has the ability to "carry" the registration like a car dealer, until it is resold or disposed of. |
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