Archive for February, 2010

Basic Plan for Buying and Selling Muscle Cars

February 14, 2010

The other day I got an e-mail from a man in Houston saying he was interested in doing a Muscle Car Dealership and wanted to know what I was looking to do to get one started and maybe there would be an opportunity for me to be part of his plan. ( sorry about the long sentence )

There is no big secret here and I will share my plan with anyone who is interested.  It is not rocket science.  Every Muscle Car has a basic value associated with it.  The value depends on the quality of the vehicle, it’s condition, it’s rarity, the options, the color, and of course the rabidness of it’s fans.  There are other things as well, but basically that’s the way prices are determined.  Every area of the country or the world for that matter also plays into the equation as well.  Currently because of the economy the Middle East seems to be buying up a lot of these cars.  Every car that leaves the country means the ones left here become more valuable because they become rarer.

You want to find cars that are priced below value so that you have a greater opportunity to sell it for a profit.  Very simple concept.  Buy low; sell high.  The challenge lies in being able to find the cars.  And then once you find the car you need to transport it to where you are.  And then you need to find the buyer for the vehicle.  The buyer who has the cash or the resources to actually buy it.  From what I get on feedback from E-Bay it seems around half of the “sales” do not go through because people are bidding for cars they have no way to actually purchase.  And to consign your vehicle with a collector car dealer means you will pay anywhere from 10% to as high as 20% of the price to a dealership.  Consignment prices ARE NEGOTIABLE.  If you decide to have a dealer sell for you, always check with a couple dealers in your area and then negotiate the rate.  It can amount to a lot of cash in your pocket instead of someone else’s.

Unless you have lots of space to have a car sit around for several months do not buy incomplete or project vehicles.  Also do not take on one of these unless you are very mechanically inclined because paying someone else to do the labor for you means you will probably NOT make a profit.

Remember, that there are several types of collector vehicles out there.  Muscle Cars are one segment that seems to be more reliable on increasing in value because they are the prefered vehicle for the Baby Boomer Generation.  The largest number of buyers means the seller has more opportunity to sell for more.  There are also classic cars and collectible cars and antique cars….not to mention the resto-mods and customs and hot rods.  Resto’s, customs and rods are among the hardest to make a profit on because they are highly subject to personal appeal.  The buyer has to want what you have almost exactly, and since personal tastes are so varied it becomes much harder to find the one buyer you need.  There are literally thousands of hot rods being sold for half of what they cost to build every year.  While they represent a chance to buy something really cool and unique-  sitting on a car for several months before you sell it can be very discouraging.  The idea is to sell a car within a month or two of the time you buy it.  Making 20% on a car and “flipping” it every 3 months means you make 80% gross profit on your money every year.  In reality you should be able to flip 2 or 3 per year and make from 40-60%.

Well….that is the basics and for those who wonder why I would release the secrets of the business….there are a few reasons.

First of all–to show that I do know what I speak of.  After all I am looking for an investor for a business.  Second– the more people getting in on this the more demand it creates and demand always drives up prices.  And third– I would never give up all the secrets.  Like for example the 200 plus websites I use to find cars and the transportation plans for getting them. 

Davey boy

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Final Adjustments to Business Model and Plan

February 9, 2010

Well, it has been a while and even though I have not made my presence known here or in my e-zine over on www.Openzine.com/americanmusclecar – I honestly have been pretty busy.

The update is that even though nothing is finalized yet, I am closer to getting the Muscle Car business off the ground.  I have finalized the initial numbers for trying to start it up and worked on the numbers to get it off the ground and rolling.  My brother-in-law who is going to be my partner is on board with the plan and we are ready to go.  Surprisingly, after 20 or more budget plans, I find that the mere sum of $60,000 can get this rolling.  And the investor will see a return of around 30% or better for his faith.  I do NOT know of another investment that returns those kinds of profits but then again, I live in the real world, not the wild wall street “paper” world.  By “paper” world I mean that the profits are on paper and may not actually be there when you try to sell and once you take all the fees and such out of the net.  I hear guys tell me that gold has risen 40% in the past year but yet over the past 10 years it has been up and down so much that it makes the stock market look like a solid investment.  And then there is the stock market, that after losing 70% or so has come back 50%.  It’s a numbers game when they say that.  If you have a hundred dollars and lose 70% you now have 30 dollars.  Then if you gain 50% you have 45 dollars.  The end result is you still are down below half your investment not a mere 20%.  I seriously doubt if after the bath the average guy took because of overinflated stock values and “churning” those accounts to generate commisions……I seriously doubt if the average working class guy is going to return to the stock market any time soon.

And the only thing that has proven to escalate in value year after year during my lifetime has been Real Estate.  I am 52 years old and yes, certain markets have suffered from time to time but this is different.  Nearly every home and building in America has lost value.  I was not alive during the Great Depression- so I can’t talk about things that far back, but this has never happened in the past 50 years.  What was the retirement plan for America’s working class- buy a home and pay it off- then sell it when you retire and move into a smaller home- has gone into the toilet with the only savings plan that 30% of the working class had.  Despite doom and gloom, things will and are getting better.  Home values are not free-falling anymore.  People are not getting mass layoff notices anymore.  And the stock market is trying to not bottom to a new low every 2 months. 

But, what does this mean for you and I?  Simply put it means there has never been a better time to start a business or to invest in tangible assets.  Whether it is real estate, which I think still has a year or two before it would be stable enough to risk everything….but that is my OPINION…..or to invest in classic or antique automobiles which based on the auctions that have already run this year ( 2010 ) are starting to come back around.

The Muscle Car field is a little different from the classic car or antique car areas.  Cars like the woodie wagons have followers that want only those cars and then the Auburn-Cord-Duesenberg crowd collect those high end fancy cars and then there are the foreign car guys who collect the old Porsche models and Jaguars and such.  Now, in the interest of full disclosure there are Chevy guys and there are Ford guys and there are Mopar guys but a Muscle Car Collector usually has a few of the other makes as well as his favorite.  A Muscle collector usually wants a comparison collection, not just 10 different models of Fords.  A hobbyist may have only one particular make or even a single model, but for him it is a love of that car not the general Muscle Car genre.

If anyone shares my passion for these cars and wants to chat or ramble on about them with a fellow gear-head contact me.  I have gotten some feedback and it is all welcome.  But if you want to make money with these cars remember the cars are a way to make money.  You cannot be blind to the fact that not everyone wants the same thing or the same color and some guys want a car to drive and enjoy- not a million dollar hemi convertible that can’t be moved from it’s storage stall.  So while a collector with 40 or 50 cars wants a numbers matching vehicle that is pristine and original; there will always be a market for a 1969 Chevelle with a “crate” 350 and a nice cam.

Well, I will try to update once I get solid news on my financing or whatever course this takes and in the meantime…………Keep on Truckin’

daveyboy