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This guy is living every teenage boy's dream.
Fast cars, Miami beach lifestyle, and tens of thousands a month in profit PER CAR chis way. Oh to be young and entrepreneurial in America.
BUT FIRST.... A CASHFLOW IDEA
In 2019 alone, there were 276 million vehicles registered in the US… only 60k carwashes. So, a 23-year-old Tennessean college dropout acquired one and makes around $7k a month from her car wash. Our most recent playbook covers:
- Where to find car washes for sale
- Due diligence steps
- How to valuate the listing
- Full financial breakdowns
- And how to run them with operators...
Want this playbook along with SIX other full asset breakdowns for you to cashflow on?
Today in < 10 minutes → We’re Going to Dive into:
- A Contrarian Rant → On US Productivity & WTF Is Happening
- Race Car Rental → How to rent out Supercars, Rake in Cash
- Carbitrage → Car Supply Demand Off-balance
- How We're Playing this Market Today
Contrarian Rant: Why Most People Will Never Be Rich & How You Can Be...
I consider this section my tough life lessons most people will never say because they want to make everyone feel good instead of be good. Well, my hellions, I am not here to make you feel good, I am here to set you free.
There is a big huge world of difference between those two things.
So in that vein.... a hard truth. We as Americans are suffering from a lack of productivity.
All around us it turns out US Productivity numbers were down 4.2%, the largest productivity drop in FOUR DECADES.
US Productivity (Also measuring increasing population poised on retirement)
Or if you want to say it in cowboy speak like my father... "You can lead a horse to water but you can't make it drink."
We are having a dearth of what I'd call "desire to labor." We are working a bit less, and producing even less. This is where most bemoan how people "don't want to work," or "don't have the work ethic they used to," or some version of, "kids these days."
Can I tell you a secret?
I love lazy, unproductive people. LOVE 'Em.
Let me help you flip the script on this one.
Instead of bemoaning something you can't control, aka other people and their addiction to short-term rewards, focus on what you can control. One day I realized that it gets infinitely easier to 10x your output when most others are barely doing a 1x. Now we're good humans, so you try to help others level up but at the end of the day, we are each our own masters. No other can teach us to kindle that flaming burning insatiable monster called, desire.
The truth is it's often a thankless job trying to help people help themselves. The 20% of humans who crush it, were probably going to regardless. The 80% who were not are a harder horse to lead to water.
So remember this, as the hours are long, as the hard-charging colleagues and employees are scarce, you are rare. In a world of coasters, you are a pedal to the floor type of human. Or you wouldn't be reading this today. While the world slows... keep going.
Race Car Rental
How do I know inflation & market bubbles are here?
Well according to one car rental company, you can buy a Lambo new for $200kish, then rent it out for big dollars, and finally turn around and sell it for $220-250k. Carbitrage. I'm patenting that term.*
Let's break down how one guy does the rentals, how another guy buys supercars for the wealthy and takes a cut and finally how you too can carbitrage. Three ideas for making cash from cars.
Idea #1: I Got A Guy...
I met a guy in Miami. He rents out 30 supercars and makes $13-40k a month per car. This 30 something is living every 16-year-olds dream. Buying luxury whips, renting them, and reselling them for a profit.
I sat listening to him explain the business model and a line stuck out, "What if you could buy a supercar with a loan, put a fraction down, rent it out for tens of thousands a month, and then sell it for more than you bought it? That's what I'm doing."
To which I reply, "Ahem, tell me (and my 1000's of Contrarians) more...
Well pre-covid he was dreaming about driving these bad boys while watching Youtube videos now he's executing. He saw a market opportunity in Florida with the massive amount of high tax state transplants moving, record tourist levels, shortage of rental cars, and a fast-paced lifestyle that likes shiny objects. He thought - man, I could probably buy the cars I've been obsessing about for decades, rent them to other people, drive them myself and make a pretty penny doing it.
Turns out he was right. He kicked up a website, put on some images, got a loan for a supercar (you'd need a credit history or a backer for this potentially), and then starting offering rentals. That led to a business he now oversees but spends little time on.
The model in action, he bought a:
- 2011 Rolls Royce Ghost in October $109k w/ warranty
- It retails for $129k
- He rents out it during busy season in Miami of November to May for on avg $1200 a day
- His Ghost is out 13-30 days a month
- In slow season 7/8 days=
- = Grand total of $15-36k a month revenue (ON ONE CAR)
Let's break down the profit:
- Overhead is storing cars (cheap - $100-300 a month)
- Delivery driver who does drop off and pick up costs $25 both way
- Pro tip: client pays $150 each way
- Maintenance - $1k-2k a month but usually under warranty
- Insurance - $100-200 a month
- Except tires which costs $500-1000 or so a month on avg
- = Profit: $9k - 29k a month
This gent however does not have one car, he has 30. That's $300,000 to $870,000 PER MONTH. No wonder he's such a fast-talking smiley dude.
The Downside?
Historically, supercars and exotics have depreciated about as quickly as a used wedding dress. For you gents, that means a LOT. In a normal market, 50% of the profits would be eaten away by depreciation.
In today's market, he makes money flipping them. Hold please, we'll get to that.
IDEA #2: Don't Buy for You, Buy For Them.
Sahil Arora of RpssGroupllc.com comes from a long line of Indian entrepreneurs and hustlers. He's loved cars from a young age (what guy doesn’t) but obviously, it’s a pricy mistress. So he started researching how he could be around his dream cars without having to buy them. He started by going to local dealerships near where he grew up and developing relationships. He would help any connection that wanted to buy a luxury car so he could get FaceTime with the salespeople and managers. Eventually, that turned into a large consulting business all focused on finding the cars, dealing with the headaches and all-around putting the wealthy in wild whips.
He's now bought and sold for investment 150 luxury cars and appears to have quite a few just for himself now :). Perks of the biz and all that.
The model makes sense, buying a car is a lower ring of Dantes inferno even when you're spending hundreds of thousands of dollars. Sahil cures that for big timers. He acts as the middle man between the dealer and seller. Negotiating the best deal, warranty and add-ons as well as finding you that perfect color lime green Lambo or whatever the cool kids buy these days.
Business Model
For his help sourcing and dealing with the hellacious pain of car salesmen, he gets $2K retainer and 15% of the total purchase price.
So if he helps you buy this $489,888 Ferrari Spider...
He makes, $74,833.20 + $2,000 upfront so about $76k.
Not bad, eh.
Now I can already read your minds. Why in the world would anyone pay an entire years salary for one car purchase and where can I find them so I can sell them some ice?
When you buy at this level the game is a bit different. Often times, you can't even buy the cars without connections. Average wait time on a custom Ferrari is 5 years.
You also negotiate the add on packages, the purchase price and the warranties. His game is if they find a better deal out there than he got them, money back guarantee.
So if you're likable, have good connections, happy to wheel and deal with car salesmen, and know a thing or 27 about cars, maybe car consultant is your new business card.
For me.. I'll probably just hire Sahil. "Hey Sahil, do you do deals on Hondas?" 😂
CRAZY IDEA #3 : CARBITRAGE
Now, this model I am testing out. Let me show you...
In a 101 lesson on supply and demand, cars are massively in demand, supply is massively limited.
What happens in that kind of market?
Prices go up.
Case in point my husband and I went to go buy a Tesla and this happened:
https://www.tiktok.com/@realcodiesanchez/video/7002716490621406469?is_from_webapp=v1&lang=en
Essentially it costs more to buy an old tesla than a new one. Wild.
Same with Porsches which are on an 8 month waiting list. The problem all starts with a delay in new car manufacturing. There were 3.3 million cars in lots last year in 2020, this year there are about 970,000. That is 1/3 of the inventory.
Why? Chip shortages, there aren't enough chips right now to drive the electronic components of cars.
- Carmakers shut plants during the COVID-19 pandemic last year
- Consumers stocked up on laptops, gaming consoles and electronic products during the pandemic, leading to tighter inventory
- They also bought more cars than expected last spring
- Sanctions against Chinese tech companies have further exacerbated the crisis
This means for now too many people want whips, not enough people are going to get them. Eventually, the supply and demand curve will equalize, but in the meantime:
- There are Hyundai's going for $10k over asking for an old one
- The new Mercedes GLE they are sending without GPS bc they are out of chips, and they will insert it later
- Rolls Royce has a 3.5 year waitlist for customer
- Standard RR wait is 15-18 months waitlist
- And a 2019 RRR with 30k miles on it is going for $40k more than a new 2021 version is worth
The industry expects that the shortages will revert somewhere between March to Fall of 2022. I have no idea if that's true or not. But for those who want a little risk in the game, maybe the only thing to flip isn't houses. Your Instagram game is about to be lit.
Question everything & arbitrage,
Codie
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