Here’s a story of value and planning! Most investors are always looking for new and better ways to get a safe high return on their capital. When I used to own a few car lots, I was then not an investor, but a simple business man/car dealer who had the unfortunate burden of something called “overhead”. Almost all business have some degree of overhead, correct?
Well, as I exited the car business, I still like the idea of buying cars at the auction at wholesale prices, being able to drive the car for a month or two or three, and then sell it for a decent profit. Right from my home, without any overhead. Note: I did this for years as a hobby and a way to drive cars that I liked and actually make money while doing so. Because I was able to advertise for free on Craig’s List, keep the cars in my home, I really had no overhead. It was a great second income. And most importantly, I only bought cars I liked.
Here’s where the ’04 500SL gets interesting. For starters, I bought it last April 2018 expecting to sell the car in a few weeks, maybe a month or two at the longest. It didn’t turn out that way. I kept the car for almost a year. It seemed like the entire car market had gone south. The people calling were just dealers like myself trying to steal the car for less than I paid.
Understand, this car has a market value of $11,000-12,000. I only paid $5,500 and was trying to sell it for $8,500 (Way below the market value shown.) Even with all the time that had gone by, approximately 10 months, I was able to drive and enjoy the car.
Understand, this car new is well over $145,000. Understand, mines an ’04 and I stole it for $5,500. I still prepared for the worst. I made sure that I didn’t need to pay rent to keep the car anywhere. I kept the car at home in my garage. The car does not go down in value. It has bottomed out. Because of that, I was not losing money holding onto this car unlike so many used car dealers who lose money when they don’t sell a particular car in 3, 4 or 5 months.
Not the case with me on this car. When I finally sold the car for $8,000, even with the deck stacked against me, I made a $2,000 net profit on a $5,500 investment that I considered to be a secure investment because it’s backed by the car itself. Remember, the car is worth $11,000 to $12,000. The best feeling was not making $2,000, it was simply driving a beautiful Mercedes that was worth thousands more than I paid. And also knowing that every day I drove the car, it was not losing value. That’s the anatomy of a used car dealer. They have to know what to buy, how much to pay, and like real estate, if the car needs any repairs, they better be able to get the work done for pennies on the dollar just like I do.
I believe I made almost 30% return on my money in 10 months time. I’m not sure, you can do the math. A $2,000 return on a $5,500 investment. Nobodies getting rich here, but I am driving for free and making double digit returns while doing so. Not a bad second business for a hobby, wouldn’t you say?
About The Author
- Robert Louis Annenberg Is a 40 year seasoned property owner, manager, investor, builder/developer and business man who is also an author of five published books to date (Amazon.com) and the chief editor of LifeQuestJournal.com. He can be reached at: Info@RobertAnnenberg.com and (201) 289-2500.
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