Some so great, some don't. YMMW it depends to what scale. If you plan to specialize in a very niche low volume market - then a lot won't apply.
1.)Dealer License. Not a biggie, but cumbersome depending on the state.
(Requires proper insurance, dealer plates, and in some states - physical location that stores X number of units)
2.)Market is at a high point now. (Mind you in stocks, we LOVE saying "don't time the market! it's ok if it goes down after you buy it! ) but many of us in varying businesses - well, we like profits. Big ones.
3.)You make your profit when you BUY the car. Why? Because it's inevitable you'll sell it. It's a a guarantee you'll sell it. But at time of buying, you should *know* the endgame - how much do you spend on reconditioning - who is your final buyer - how much will they pay - and WHEN -- keep in mind in normal times, cars depreciate. The Big Auto Dealer Chains (AutoNation, Lithia - the "transparent" ones who crush people and make the biggest profits....) - allow a used car on the lot for 60 days - after that, staff gets financially penalized for having it on the lot.
4.)Have vendors on the ready. The paint guy, the dent guy, the windshield guy. The Body shop. The State Inspections shop. The Brakes and Tires guy, etc etc etc. Decide if they will get your cars DONE without making you hold onto the car too long.
BTW "Lot Rot" - it's fun if you recondition your car perfectly - but then innocently, a mechanical thing goes wrong, someone scratches it, etc.
5) .Dealing with the public. - the fun part. Sure, plenty of fine people just want to sign and buy. BUT keep in mind, meeting strangers off "Craigslist" etc. That comes with risk - and if something goes wrong with the car - well - these days with the great culture that we weren't allowed to discuss - people hurt people over the wrong French fry order so keep that in mind. Also note costs of putting your car online - not just the free sites, but a paid site or two and why said website will optimize YOUR listing to be seen on the top. of page -versus someone listing 200 cars a month.
Oh, and hope that your buyer has cash ready - MOST customers aren't like people on this forum - they DON'T have that kind of money and many - *gasp* have poor credit histories so when they say "ya I'll buy it" - the friendly girl at the bank tells them otherwise. The "I got approved online, here's my voucher" people - - have to prove income, debt ratios, etc - - not always easy - and - well - not the most reliable clientele -- and they know it - they receive mail and phone calls about that problem all the time.
Conversely there are success stories. A fella owned a gas station in Virginia in the 50s, and a company called Pontiac asked him to sell a few cars off his lot. Since then that guy bought up real estate in Tyson's Corner when it was nothing - and today owns 22 dealerships in Northern Virginia. There's small individual retailers who know their businesses and do very well too. But there's more fails than success.
I *have* seen people who are mechanics. REAL mechanics not "I love cars sine I was a kid" but REAL mechanics do ok with buying a turd....using their own sweat equity to fix it up ...and turn it for a profit.
It's like anything I guess: Some do well, some get crushed.
Also, let's look at retailers - those evil dealers. What are the gross profiting on the used car? Average cost of a unit - what - $25,000? They gross $2,000 on the sale after all reconditioning costs. A doc fee of lets use 500. So he made $2500. BUT he still needs to pay rent, fixed overhead, advertising, insurance, etc. Yes he makes money on financing and after sale products but usually a one man car investor won't have that.
The percentage of net profit - would be laughed out of the room on this forum - especially if sweat equity was being put in and it's not passive.
Only if you are a true gambler.
