Saturday 15 May 2010

Budget Cars Deals (i)

I know nothing about cars - let's be clear about that first and foremost. I do, however, know a good bit about trading and dealing with motivated sellers.

Every day in the UK dozens of people will put their house on the market not because they have a whim to move to a bigger house but rather because they have a dire need to sell due to debt, divorce or death.

By scale you would be led to believe that the amount of people putting cars on the market would be ten-fold.

There is a much larger second hand car market than second hand houses. Every week a good 40,000 cars will come up for sale. We can assume that at least 3000 of these will be in Scotland.

My idea is to go out into the Scottish market and make a low-ball bid on the cheapest 1000 of these cars. We know from the property game that 1 to 2% of these people will get back to us. Of these we'll probably be able to strike a deal on 5 to 10 cars a week.

We would then sell these cars at market price via a yard, Ebay and a separate on-line presence. We should be able to achieve a 30%+ margin on each deal given the discount provided by the motivated seller.

Ideally, if I was to start a business like this I'd like to partner with someone mechanically minded as an emergency backup (however a key caveat of my purchases would be that the cars had had a regularly recent MOT).

If you have tried this before, have any feedback to give me, or would like to get involved in such a business then please get in touch:

ross.taylor1@live.co.uk

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