Listener requesting insider tips on the wholesale biz.
I have been listening to your show on 97.5 in Houston since it started this year. I have been struck by the genuine joy you appear to have for what you do. Is it possible for you to advise me how I might get involved in used car wholesaling or used car sales? I have started several small businesses in addition to working for the U.S. Government. I have read the licensing requirements and as much information on the web as I can, what I don’t have is someone that does it or is successful at it to advise me whether or not I could be successful.
If you could give me any suggestion or advise, I would really appreciate it
This is going to sound clique, but it’s my opinion..and that’s what you asked for. What I have learned about wholesale trading is deep and complex from transaction history, yet simple in the fundamentals. I’ll try and hit some highlights in this response.
There are two major parts to success in the biz. A): knowing the cars & having the instincts to make good decisions, and more importantly B): creating and maintaining relationships with buyers/managers/owners at the dealerships.
It won’t work without both A & B combined. The starting block to learning the wholesale biz, unless you have someone that will train you day in and day out for a few years, is to begin in the retail biz.
You can literally get your license, get half ass versed on MMR reporting, goto the auction, buy a 4×4 truck or 50-70k mile luxury car, put it on Ebay and make money. Avereage 1,500 bucks on Ebay deals. Ave means, some will make 3,000..and some will break even or loose a tad.
I have taught extreme laymen to do this that have worked for me, and they have been successful at it. Selling (retail-public) on the internet is easy, the money is ALWAYS made on the buy. YOU MAKE YOUR MONEY WHEN YOU BUY. The cars are going to sell for what they sell for, the market will control that for the most part. Most of the art, is in the buy, and it takes time to learn that skill. Time=experience=transactions under your belt.
After you buy and sell 50 units, you’ll have A) made some decent money, and B) have a pretty good idea of what in the hell you are doing, you may get a little exited at this point. You’ll be able to look back at those 50 deals one by one, and know when and how and why the winners won, and the loosers lost, and you’ll even be able to look back at that run of transactions and see where you made a mistake on the buy, but got lucky anyway, and made money. (Remember, there is an ass for every single seat out there) Also, when you bought a car too cheap, and short sold it bc you see where you literally pay as much for a replacement unit (similar) for the amount that you sold one for.
So there’s a balancing act of *paying enough to get the RIGHT unit bought vs *knowing when to take a loss or short selling the wrong unit. Back when I was flipping 100 cars a week, I lost money 20% of the time. I say that, to describe how close to the money line these trader’s operate on. In many cases a good wholesaler will pay more for a unit, than a in experienced trader will sell it for. But as long as they both made money, both parties got yet another transaction under their belt, and both learned something for the next one.
Two key pieces of advice from two old time, and very successful old salt of the sea wholesale dealers that I received early on. Didn’t make a lot of sense to me at the time, but damn sure did later on.
Kenneth Standley: “You can’t pay too much for the RIGHT car, and you can’t buy the WRONG one cheap enough”
Jerry McKinney: “The most money you’ll ever make in this business….is sometimes NOT doing business”
There is also a saying “If you want to make a million bucks in the car business, you need to start out with Two (million)” This is a VERY true statement in the franchised new dealer sector, not need be applicable in the independent used dealer.
That’s probably just enough info to create a lot more questions, but hopefully it helped.
We’ll see you on the radio this Saturday morning,
John Clay Wolfe