Used car sales business in TX! *HELP PLEASE*

[GreaterVisibility]

I have done a little car flipping myself with a guy I knew in another city. It was fun, and I made some money on the side by doing it. He eventually gave up his dealer's license and went out of the business altogether. I liked it enough to consider it myself, but there are too many requirements, and costly ones at that, in my state to pursue it. I'd have to have a certain size lot, signage, be open certain hours, etc. I have other business interests, so that can't happen.

I still think there is a market for flipping cars for sure. Yes, more people keep cars and repair them as much as they can, but people still buy plenty of cars, they may not be buying new cars when they have bad credit or their own financial issues and don't want payements. So, cash cars could be where it's at. The money is made at the purchase, much like with real estate. You have to get the car at the best price possible to give you margin to work with when reselling it.

Best of luck to you. I hope it works out well for you, and think you're smart to keep things separate from your dad.

[Reflo Ltd]

I had a salvage license for a short while. I am sure Ohio is different than Texas.

Simply stated, if you have the requirements to obtain a license, the move forward. There are probably different licenses for salvage vs used cars..... and different requirements.

As for forming an LLC, you are treated basically as an individual for tax purposes..... BUT..... for legal reasons, such as liability, you can get in a pinch. One important aspect is to not co-mingle funds. That means do not use the LLC account to buy groceries, pay household bills, etc. You should pay yourself from the LLC and deposit money in your personal account before using it for personal needs.

You will also likely need some form of insurance which can be quite expensive depending on what type of operation you wish to begin.

[SteveM]

I've worked with an auto group in a major metro area for 16 years, so I know there is money in what you are proposing to do, but like everything else, there is way more to the story then meets the eye. It might not be a bad idea for you to get a short-term job at a small-to-medium-sized dealership to see how it works professionally. Selling used cars is a lot more of a science then most people would believe, and there are many, many factors to consider before you dive in head-first.

There are plenty of people buying cars these days, both on-line and off-line, and the market is super-hot for cheap used cars, but only cheap used cars that have been well reconditioned, and that's the paradox. Everyone is suffering economically, so they want to spend $3,000 for a vehicle that should be a $7000 lot car. It can be done, and IS done by plenty of people, but only if you make the absolute "right" buys at the auctions. I've seen wholesalers that have been in business for 30 years, doing exactly the business you describe you want to get into, brought to their knees by this economy.

Just buying a car at the auction doesn't guarantee profits, especially when you realize what kinds of cars are at the auctions. Dealers bring vehicles to the auctions to GET RID OF THEM, and usually for a good reason. The check engine light that's on could mean a $2500 torque converter issue, or that air bag light could mean replacing a $1500 seat sensor. Dealers will also put heavy oils in engines to disguise engine rod-knock, and many other diabolical tricks to "roll some iron", so you have to know what you're doing.

Even if you buy a decent car, did you buy it at the right wholesale price for the retail market on that car? Just because cars are listed on the internet at a certain price, doesn't mean they actually SELL for that price, as many sellers negotiate. Some models get hot for a period of time, and then cool off. You could buy a pickup truck for $20,000 one week, then the price of gas goes through the roof, and trucks lose $3000 worth of retail value in a month - I've seen that many times.

I'm not trying to discourage you, just open your eyes as to what you could be getting into! Selling cars can be seriously fun, but if you don't have your back against the wall at all times, it can also lose you a lot of money.

Good luck!