Re: Briton, I have an answer - Posted by Dr. Craig Whisler CA NV
Posted by Dr. Craig Whisler CA NV on September 07, 2003 at 17:00:57:
I look the same place for cars as I do for real estate: everywhere.
I look for motivated sellers and fixer uppers, just as with mobile homes and sfrs. I often buy cars that aren’t running. Such sellers are generally highly motivated because there are very few people who will buy a car that doesn’t run. They are all afraid to take a calculated risk. People are funny. Some are firemen or policemen or soldiers or munitions experts or bio/chemical weopens research scientists. They risk their lives every day, but all are afraid to take a $200 risk when buying a $1,000 car that doesn’t run. Go figure.
Just like with buying rehab properties, the sales price of non-running cars is DEEPLY discounted because of the work needed and the risk of unknown problems. When NO buyers show up, the sellers get desperate and will usually accept ANY offer over what the junk yard will pay (which is about $100). You can’t believe how many thousand dollar cars I get for $200 ea.
In time you learn to question the sellers just as you would question prospective tenants. You learn certain things that your experience suggests will probably be true about either people or cars, depending on their answers. You try to figure out who is lying and who isn’t. You learn to be a fairly keen judge of people, and their veracity. You check things out for yourself.
You eventually learn that certain types of repairs are quick and cheap to make and others are just the opposite. Its the same as when analysing a rehab house. You estimate various repair costs. You know how much it costs to replace a roof, carpet, or to repaint. The same is true for cars. Sellers often don’t distinguish between different types of repairs and they all seem to figure it will cost too much to fix unknown problems. The same types of repairs will cost different amounts from one brand of cars to another. It is a knowlege game. I know more about car repairs that the sellers that I buy from. Guess who wins in any knowledge game? I know that it is 10 times harder to replace a head gasket on an 87 Camry than on an 87 Civic. Guess which one I’ll buy and which one I won’t. The sellers don’t know which are harder or easier on to fix. I do. They price them all the same (based on appearance or how much they have ‘invested’ in them). Ever notice how they always call their lost money an investment? Car sellers are just like mobile home sellers. They all want three times what their car or mobile home is worth, at first. I make a dozen low-ball offers (over the phone) for every one I buy, same as with mobile homes.
Fortunately I get paid for what I know, not what I do.
My favorite non-runner is a late 80s Honda or Toyota that still runs but has a blown head gasket. It has water in the oil and when running blows out a huge cloud of white smoke (steam) from the exhause pipe. To a non-mechanic that sure looks like an expensive problem to fix. I get that nice looking 87 Honda Accord, that was just relicensed last month, and has $200 worth of new tires on it, for $200.
$4, and half a bottle of CRC Copper Block Seal poured in the radiator and that $200 car suddenly stops smoking completely and is now worth $1,000. Hummm. The cars make nice trades too, like for work moving and setting up mobile homes, rehabwork etc.
When trading I use the blue book retail value which might be about $1,500 on a typical car.
I am an unlicensed bandit dealer. My costs are low. I work out of my pockets and cell phone, whereever I am. My car lot is down on the corner somewhere. I don’t know who owns it but I sure do appreciate the free use of it, to display my cars on.
Incidentally, I get all of my car repairs done free. But I guess you probably could have figured that for yourself. My mechanic doesn’t have my buying/selling skills so about every 3rd or 4th car or so I buy him one, using his money. After it is fixed I sell it for him and give him all of the money it brings in, in exchange for him repairing my cars. I could make the same deal with my rehab guy.
So much business knowlege is transferable from one business to another. Law, accounting, taxes, advertising, salesmanship, cost control, handling empoyees, negotiation skills etc. What a great way to go through life: having business skills.
It sure beats working for a living.