Concierge Car Buying and Flipping

Ahh, side hustles. We all know the common ones:

• Rideshare + food delivery

• E-commerce

• Freelancing

• Tutoring

What about side hustles that no one knows or talks about? Or side hustles that can really scale into big businesses?

Here’s one: concierge car buying and flipping.

It’s a killer way to make an extra $11k+/month without employees or full time commitment, and yes, it can scale.

How do I know? I’ve done it (more on that later)

Let’s start with concierge car buying.

“Concierge” car buying is an alternative to going to that hellscape that we refer to as a used car lot. It’s fundamentally a better experience.

WIth concierge buying someone tells you, “Ok, I want a white F-150, between, 2017 and 2020 with no more than 80k miles.”

It’s awesome, because us Americans are always buying cars, so it’s a great biz to start with friends and family, and then it can be highly referral-driven.

I’ve purchased 4 different cars through a guy that did this, and I’ve also sold a couple dozen cars with this model as well.

Here’s exactly how to do it, step by step:

1. Get a dealers license with your state. Regulations vary so I’ll just speak to Texas.

Some states will require you to have a lot with X number of designated car spaces. This can be circumvented with shared lots or by using any small commercial space.

When I did this I used the lot of a small office space I was renting for another business.

Or if you simply want a wholesale license you won’t need a lot at all.

You just need to fill out paperwork, get a surety bond (Google it) and pay a small fee. It takes a few weeks and a few headaches working with a government agency.

Note: It really helps if you’re a “car person” to do this side hustle. You don’t have to be mechanically inclined, but it really helps to love cars and have a general knowledge of them. I didn’t, and that’s one reason why I hated and abandoned this project. It was definitely profitable, though.

2. Use your new dealer’s license # to register with Manheim and Adessa. These are the big two auto auction companies, with a presence in every major metro.

This allows you to buy cars at wholesale.

Shoot, it’s almost worth getting a dealer’s license just to buy your own car for $4k less than retail.

3. Start learning MMRs. MMR stands for Manheim Market Report and it basically means the wholesale valuation of a car. Pull up your export and cars.com in side by side windows and start researching what the most profitable cars are. This will help you with both the flipping and the concierge strategies.

4. Start going to the auctions. These are fun. There’s usually only 1-3 per week and you can download the inventory list beforehand to do your research. Turns out my login access to Manheim still works, so I downloaded the CSV of today’s auction. If you’re a data nerd take a look.

For the first couple weeks just go to learn. Watch how the auctioneers and buyers interact. Learn the culture and go shake some hands. Notice how the online sales compare to in person. It goes by really fast and can be a bit overwhelming.

5. Ok, so now you’re in the game and have the ability to buy, but what about customers?

Start with friends and family, and make sure everyone buys an extended warranty from Manheim. Why? Because you don't want to be on the hook if something goes wrong, especially with friends and family.

Ask for referrals from these friends and family members after they use you. Or ask them to post about you on social media.

This almost needs to start as a referral-driven business, because you need people to pay you upfront. There's a lot of trust involved.

Once you have a customer, start by finding out what they want and then run an export like the one I linked above for upcoming auctions, filter out types types of trucks and send them to the buyer.

They pick out 2-3 options and indicate how much they’re willing to pay for each. You can provide guidance along the way, but almost all of this can be automated with Zapier, Typeform and ChatGPT.

Your fee? Around $750.

It’s a win-win. The buyer pays dealer price + $750 and doesn’t have to withstand the brain damage that is a used car lot.

And as for you? You can make $750 from 10 different buyers all during the same 3 hour auction.

Paying for the car can be the tricky part.

‍Once you win the auction you’ve gotta pay, so ideally the customer sends you the cash upfront via certified check or wire. The economics of fronting $25k for a $750 gross profit isn’t awesome.

‍The customer should ideally send you the max amount they’re willing to pay beforehand, plus your fee, taxes and other fees, and then you can send back the difference.

I honestly think this could net someone $11k per month without employees at 20 hours/week.

Let’s break down the math:

What if something goes wrong with the car after you buy it? Be sure to buy ones with manufacturer warranties or you'll pay the auction extra to get a warranty and pass that on to the customer, remember?

‍This business really works best with more expensive cars because there’s a more attractive value proposition. $100k car buyers could save $3-5k using you, net of fees, whereas a $20k car might only be a $1k savings, net of fees.

What about car flipping?

That one is much more simple, but you need more cash upfront. Here’s what I’d do:

1. Google a list of the best selling cars in 2023

2. Export the upcoming Manheim cars and find out the MMRs of these popular makes and models and find the most profitable ones. Keep in mind, that most profitable doesn’t always equal most in demand. You want that thing to move fast, so look for a good balance between profit and demand. You’ll do this after completing step #3 below.

3. Go to Facebook Marketplace and list 10 of those cars for sale using images from other For Sale listings on Cars.com, and at a price where you could make a profit.

4. Wait. No really, wait and see which of your listings get the most bites. Play around with price points. Do you have to make $5k per car or are you okay making $500 per car?

5. List 10 more cars that are at the very bottom of the 2023 best sellers list. Why? Because we’re looking for supply and demand imbalances, not just popular cars. Maybe there are only 100 people looking at the 300 available Camrys in your local market. But the Pontiac Aztek has a supply of 2 but 20 buyers. Do you get it? There are market inefficiencies EVERYWHERE. So you need to list EVERYTHING, to learn what they are.

6. Keep track of everything in a Google Sheet. What does everyone want? Be sure to respond to the inquiries, because these are actual buyers, not just data points.

7. Take action based on what you learn. You can combine both strategies. If you know that 4 people have cash now and really, really want that Aztek, then get deposits and go buy some Azteks. The irony is, you likely won’t even need to list it for sale once you buy it.

‍You’ll need some cash to flip cars, for sure. But as you scale there are a dozen companies happy to short-term finance your cars while you take some time to sell them.

Here’s why I both love and hate each model

Concierge Love:

• Requires almost no cash, considering buyers pay upfront

• If you love cars, it’s an amazing way to scratch that itch and follow your passion

• It really can provide a six figure income on the side

• With more employees and a physical location, it can scale to be a big business

Concierge Hate:

• Licensing can take a while and is a bit annoying

• Cars break down, no matter how new. This can be stressful

• Working with retail customers can be annoying. What happens when the car has a tear in the leather that wasn’t shown in pictures?

• You’ll likely take a big hit during a recession.

• Concierge is hard to spell

I touched on this in last week’s newsletter, but I did not like this business. I don’t care about cars and I launched during the Texas summer and that auction blacktop is HOT.

I was buying cars that were too cheap for people and they were breaking down. It wasn’t a good customer segment. Also, my main business was doing really well at the time, so this just became a distraction. After buying and selling about 25 cars I pulled the plug.

‍Flipping Love:

• It’s so data driven. You can really de-risk by doing this Facebook Marketplace research, and even pre-sell cars before you buy them.

• You aren’t reinventing the wheel. If an idiot used car guy can make good money, you can too.

• It can be very profitable, especially if you don’t have the overhead of a dealership.

Flipping Hate:

• Despite all the data at your fingertips, your competitors likely know a whole ton more about the nuances of these cars than you. They don’t have to do research on Facebook Marketplace, because they’ve lived it for 30 years.

• Carrying and maintenance costs can be risky and really add up.

• It can be logistically challenging to keep up with all of the inquiries and showings.

• Also likely to take a hit during a recession

Regardless of where you are in your startup journey, I hope you learned something here. Thanks for reading!

FYI, we moved our TreeBizBootcamp.com dates to January and added a cheaper virtual option by popular demand. It’s fun to see it fill up with people I’ve been emailing with this last month or so. Hope to see a few of y’all there.

Please forward this to someone that loves cars and entrepreneurship. Have a great weekend!

Chris
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