O/T... Starting a new business..

[michael0077]

My goals is to just have 50-100 bhph cars on the road.. the bread and butter of my biz will be higher end car/trucks for people with 800 ficos.. bhph is just a worst case scenario..

You can let someone walk out with 3000 cash and go somewhere where they CAN get financed or you can take the risk and get the reward..

And down here we have a huge poultry industry and are swamped with illegals/immigrants.. and they good thing about them is they PAY EARLY most of the time.. they want ZERO problems

My father [dick head] owns a apartment complex in Roseville ca..all immigrants, all pay cash...he rants about how much he makes just from the laundry machines...yes all cash just a lot of drama

 

[LK3]

Cauthen - dont let anyone discourage your drive and determination... GI - I appreciate your concern for others but its pretty elitist and condescending to take the attitude that we need to protect the poor stupid southerners from themselves... Profit is not bad and did you know that up until the last couple decades - home mortgage rates were in the high teens low 20's... Was that immoral?? Is it immoral for a furniture maker to build a couch that cost $50 yet sell for $1000?? A designer to make jeans that cost $2 and yet sell for $200.. How about the actors that love to preach liberal BS - yet make millions - freaking pretending to be someone they aren't... How is THAT not immoral???

My point is that everything is relative and to judge someone and believe that you are somehow superior is immoral in my opinion...
Dont take this personally.. I disagree with your opinion but we need to learn in this country that you can vehemently disagree on issues but its NOT personal and doesn't mean that you dislike the man..

you know i have quite a bit of history in lending industries.

i genuinely hate the money mentality. it is very much responsible for the state of our world, to me its sad, but more too.

people have given me shit for a long time because i help people for free, various gf's etc. i do lots of work and spend lots of time helping people that are hurt or sick that regular medicine dose nothing for.

regular medicine with dr's who live in big houses and drive expensive cars, people who do nothing new or creative or useful with there life, useful like you couldn't teach a monkey or computer to do the same job.

i actually get progress that dr's could not get, yet the dr is paid and im here with thank yous on a computer screen...

i feel hurt and sick when people put money before what is right, often those types of people are the first to bitch and complain too, and not pay for free helping services.

we do all have to eat, but there are different ways to do it.

i have worked in lots of shady things, mtg industry to me is far shadier and less honorable then the illegal areas i have been involved in. at least in those people don't complain so much when things go past words...

i hate when sponsors cut corners or use cheaper products in order to make more money, im sure you guys do too. how many of you though are willing to make less to do right by all? i live my answer every day even when its hard.

regarding the car dealership...

i don't have a problem with the type of dealership, it is what it is.

i have met some real scumbags that have places like that and make lots of money with them, they are genuinely shitty people, the kind who deserve horrible things. i have also met people that do a decent business. i think you can have a reasonably honorable business doing this, just depends on the individual.

just remember to treat people how you would like to be treated.

 

[cauthen96]

you know i have quite a bit of history in lending industries.

i genuinely hate the money mentality. it is very much responsible for the state of our world, to me its sad, but more too.

people have given me shit for a long time because i help people for free, various gf's etc. i do lots of work and spend lots of time helping people that are hurt or sick that regular medicine dose nothing for.

regular medicine with dr's who live in big houses and drive expensive cars, people who do nothing new or creative or useful with there life, useful like you couldn't teach a monkey or computer to do the same job.

i actually get progress that dr's could not get, yet the dr is paid and im here with thank yous on a computer screen...

i feel hurt and sick when people put money before what is right, often those types of people are the first to bitch and complain too, and not pay for free helping services.

we do all have to eat, but there are different ways to do it.

i have worked in lots of shady things, mtg industry to me is far shadier and less honorable then the illegal areas i have been involved in. at least in those people don't complain so much when things go past words...

i hate when sponsors cut corners or use cheaper products in order to make more money, im sure you guys do too. how many of you though are willing to make less to do right by all? i live my answer every day even when its hard.

regarding the car dealership...

i don't have a problem with the type of dealership, it is what it is.

i have met some real scumbags that have places like that and make lots of money with them, they are genuinely shitty people, the kind who deserve horrible things. i have also met people that do a decent business. i think you can have a reasonably honorable business doing this, just depends on the individual.

just remember to treat people how you would like to be treated.

ding ding ding.. #1 rule of doing good long term business.

 

[Marvin Martian]

Cauthen - cool logo man!!

LK - you are genuinely a good dude and have a strong desire to help others.. I admit that I haven't always done so - but my heart by far is my biggest muscle.. I can honestly say that I try to always put the client and what's best first.. LK - I mentioned to you when I opened my branch how I was structuring loan officer comp (not that you would remember lol) - but it is VERY unconventional


I feel like a loan officer that produces should make 75-80% where most feel just the opposite.. I have seen so many guys get filthy rich off the back of others... I still produce and while I have been told time and again that this won't work - I am seeing major growth..

Point behind that is that if you helo enough people get what they want and need you will be successful.. There is NO need to take advantage of others.. I guess time will tell if I am right or wrong. I am working with a group of investors on small business lending and plan to do the same way..

 

[Pekkerwood]

Cauthen:

Congrats on starting the new business. For a few years I provided the funding for a used car business and it went well. I will offer a cautionary tale and then some general advice.

One of my friends bought an existing "note lot" in a medium town a couple hundred miles away from where we live. The seller misrepresented the books, (not uncommon with sellers I have found) but the business was still very profitable. He entered a lawsuit against the seller in this medium sized town. He being the outsider, was automatically considered a carpet bagging trouble maker by the locals. No matter, business still great. Made about $700,000 his first year.

Now this business is different from most, as most businesses will have less than 5% bad debt whereas this business will approach 20%. And they are not losing a watch or lawnmower, when they don't pay you they are losing the way they get to work, to the doctor, to their families, etc. so emotions run high. You are in the collecting business. It is fraught with peril. My friends brother made a few off hand comments to customers who then took their complaints to the local sheriff and DA. They locked his ass up with no bail, for what was basically a civil dispute or at worse a violation of federal collection practices. He spent Christmas in jail. It took about 3 weeks to get him out and he was charged with multiple felonies. None would ever get a conviction but the turmoil was enough to cost him his business. I would say this was 3 or 4 complaints after hundreds of customers.

Study collection law and practices. I own quite a bit of real estate and was visiting a personal care home that was behind on payments and the owner was not there. I spoke to residents for less than two minutes and left. Two weeks later the sheriff serves me with a notice to appear on a felony count of assaulting this 80 year old man. I never spoke to him. At court for probable cause the owner brought in ten of the residents to testify they saw it. Luckily a county worker was there at the same time I was and I was able to track him down, and he testified and judge through it out. My point being, people are treacherous and how you manage your collection efforts is going to determine how well you do, and how much you enjoy your business. One problem can cost you dearly. I saw it with my own eyes.

Most note lots fail in the first three years. I encourage you to grow slowly at first regardless of the temptation to make it all NOW!!! Learn a lot while the stakes are small. Get to a level and "coast" until you can have some data on what your loan portfolio performs like on an aged basis. How do your loans pay 6 months out etc.? Get and refine your systems. Document your systems along the way so you are developing a roadmap for your future employees.

You eventually will realize you are not in the car business, you are in the lending business. The pathway I see most often in this business to failure is the fact that if you are successful you are going to have to raise capital yourself. Eventually the majority of the money owed to you will not be your money. Yes, you are signed up for it, but it belongs to someone else. That is where I see people go wrong. They are just not as careful with other peoples money. When your deals go wrong, you will still owe.

I encourage you to grow your business smartly. When I sold my company and started a "new to me" business, I started slowly. Every year at the end of the year, I would think how lucky I was to get by,but now I know what I am doing. The next year, I couldn't believe how lucky I was the previous year, but now I know what I am doing. Been doing it that way for thirteen years and I still learn a lot every year, and have challenges I could have never seen coming.

Good systems, good discipline, slow steady growth.

Good luck to you.

PWood

 

[Cerberus777]

In a country set up where most people need wheels, BHPH helps those get back on their feet. Most of these have a bad rap. But the one in my home town doesn't. He has cars from nice, to fits anyone's budget. He has a shop, and will warranty cars if scheduled maintenance work is done in his shop. He's had to replace a few lemons, but he never really lost money.

He also does bi monthly payments, and reports to credit agencies...so people car rebuild their credit quickly.

Most buy a cheap car with 28% and in a few years buy from him again with 8% and get much nicer cars. For these people he even goes to auctions looking for cars they would like.

He's making over a million a year profit. And employees 10 people including mechanics.

 

[cauthen96]

Cauthen:

Congrats on starting the new business. For a few years I provided the funding for a used car business and it went well. I will offer a cautionary tale and then some general advice.

One of my friends bought an existing "note lot" in a medium town a couple hundred miles away from where we live. The seller misrepresented the books, (not uncommon with sellers I have found) but the business was still very profitable. He entered a lawsuit against the seller in this medium sized town. He being the outsider, was automatically considered a carpet bagging trouble maker by the locals. No matter, business still great. Made about $700,000 his first year.

Now this business is different from most, as most businesses will have less than 5% bad debt whereas this business will approach 20%. And they are not losing a watch or lawnmower, when they don't pay you they are losing the way they get to work, to the doctor, to their families, etc. so emotions run high. You are in the collecting business. It is fraught with peril. My friends brother made a few off hand comments to customers who then took their complaints to the local sheriff and DA. They locked his ass up with no bail, for what was basically a civil dispute or at worse a violation of federal collection practices. He spent Christmas in jail. It took about 3 weeks to get him out and he was charged with multiple felonies. None would ever get a conviction but the turmoil was enough to cost him his business. I would say this was 3 or 4 complaints after hundreds of customers.

Study collection law and practices. I own quite a bit of real estate and was visiting a personal care home that was behind on payments and the owner was not there. I spoke to residents for less than two minutes and left. Two weeks later the sheriff serves me with a notice to appear on a felony count of assaulting this 80 year old man. I never spoke to him. At court for probable cause the owner brought in ten of the residents to testify they saw it. Luckily a county worker was there at the same time I was and I was able to track him down, and he testified and judge through it out. My point being, people are treacherous and how you manage your collection efforts is going to determine how well you do, and how much you enjoy your business. One problem can cost you dearly. I saw it with my own eyes.

Most note lots fail in the first three years. I encourage you to grow slowly at first regardless of the temptation to make it all NOW!!! Learn a lot while the stakes are small. Get to a level and "coast" until you can have some data on what your loan portfolio performs like on an aged basis. How do your loans pay 6 months out etc.? Get and refine your systems. Document your systems along the way so you are developing a roadmap for your future employees.

You eventually will realize you are not in the car business, you are in the lending business. The pathway I see most often in this business to failure is the fact that if you are successful you are going to have to raise capital yourself. Eventually the majority of the money owed to you will not be your money. Yes, you are signed up for it, but it belongs to someone else. That is where I see people go wrong. They are just not as careful with other peoples money. When your deals go wrong, you will still owe.

I encourage you to grow your business smartly. When I sold my company and started a "new to me" business, I started slowly. Every year at the end of the year, I would think how lucky I was to get by,but now I know what I am doing. The next year, I couldn't believe how lucky I was the previous year, but now I know what I am doing. Been doing it that way for thirteen years and I still learn a lot every year, and have challenges I could have never seen coming.

Good systems, good discipline, slow steady growth.

Good luck to you.

PWood

Thanks brother! That was one hell of a reply! Im at work and dont have time to type a drawn out response but I appreciate the kind encouraging words bro!

In a country set up where most people need wheels, BHPH helps those get back on their feet. Most of these have a bad rap. But the one in my home town doesn't. He has cars from nice, to fits anyone's budget. He has a shop, and will warranty cars if scheduled maintenance work is done in his shop. He's had to replace a few lemons, but he never really lost money.

He also does bi monthly payments, and reports to credit agencies...so people car rebuild their credit quickly.

Most buy a cheap car with 28% and in a few years buy from him again with 8% and get much nicer cars. For these people he even goes to auctions looking for cars they would like.

He's making over a million a year profit. And employees 10 people including mechanics.

That is exactly my game plan! Help people get back on their feet and not just sell them one car. SELL THEM EVERY CAR from now on

 

[Cerberus777]

I also forgot to mention. In his contract he has the right to repo @15 days late i believe.

But he rarely does. For some people if they drop the car off, he'll hold it for 2 months. If the can resume payment they get it back. If not it goes back on the lot. For some, special cases and they need the car for work if the have their boss call and say the car is at work everyday they can be 30 days late....no one wants their boss calling ever day. So they catch up quick.

 

[richiec]

I also forgot to mention. In his contract he has the right to repo @15 days late i believe.

But he rarely does. For some people if they drop the car off, he'll hold it for 2 months. If the can resume payment they get it back. If not it goes back on the lot. For some, special cases and they need the car for work if the have their boss call and say the car is at work everyday they can be 30 days late....no one wants their boss calling ever day. So they catch up quick.

In a country set up where most people need wheels, BHPH helps those get back on their feet. Most of these have a bad rap. But the one in my home town doesn't. He has cars from nice, to fits anyone's budget. He has a shop, and will warranty cars if scheduled maintenance work is done in his shop. He's had to replace a few lemons, but he never really lost money.

He also does bi monthly payments, and reports to credit agencies...so people car rebuild their credit quickly.

Most buy a cheap car with 28% and in a few years buy from him again with 8% and get much nicer cars. For these people he even goes to auctions looking for cars they would like.

He's making over a million a year profit. And employees 10 people including mechanics.

That's how you run a business like this, good for your friend

 

[thebarbarian]

To elaborate a bit on what Pekkerwood said, you might want to also check out bankruptcy laws and their application to repossessions. If someone files for bankruptcy there is a stay of execution on your recovery of the vehicle that you cannot breach unless certain circumstances are met and only after written notice, if I recall correctly. Best idea would be to get in touch with an attorney that works in your type of business and document everything.

 

[Pekkerwood]

Barbarian is right on. You need to become intimately familiar with bankruptcy law, automatic stays, etc. It is one of your biggest financial risks. Even though bankruptcy is federal, the tenets vary a bit region to region. As a private lender for investor real estate, I do short term high interest loans. Some borrow for two hours, some for six months. When I say high, I generally get 25% annual interest. Usury in my state is 5% a month. I only loan to investors who are usually making good money on the "flip".

Bankruptcy horror stories:

I loaned $1.8 mil in 2006 on 300 acres to someone about to be foreclosed on. They thought the land was worth $7 mil, I thought $4.5 mill. Safe right? Not. Still in bankruptcy 8 years later. What happened in interim? Real estate crash. For those that know the concept of a stocks "beta" let me explain in real estate terms. When markets crash single family homes crash at a beta of 1. Vacations homes at 1.5 to 2, Lots at 3, Undeveloped land at "infinity".

I have spent well over $100k. She has bought on 500 pack of three ring binder notebook paper. She long hand "cuts and pastes" from the internet. Long story long, I got my property out of bankruptcy , though I am still in with her with a few minor things, and I sold it for $800,000. At any time through this process it would have been more.

I am foreclosing on a property Tuesday that the lady has filed bankruptcy 3 times in 6 months. Luckily for me, she does it "pro se" and does not realize there is no automatic stay on the third one in a year. ( you can get it but need a lawyer and a very good argument).

FLORIDA.

Let us discuss. You do a loan in a lender friendly state, say , I don't know.....Georgia. Then when your borrower files they are clever enough to go to Florida to file bankruptcy. Let us say you are borrowing at 12% because you did not heed my above post to grow slowly; you have borrowed all the cheap money and realize that even at 12% you are gonna bank coin. You do your loan at 28% for six months. Guess what? Florida bankruptcy will automatically give them 36 months at 3% interest, regardless of what you are paying for your money. Don't believe me? It happened to me. I need to dictate to Lats so he can write up this crap in his entertaining "Storytime with LATS" method.

Be careful. You know what you know. Good. You do not know what you do not know and that is a lot. Trust me.

PWood

 

[cauthen96]

Thanks for all the input guys!

I have been talking with my lawyer and we are gonna go the "buy here lease here" route..

The BK laws do not apply as its my car the whole time and it will be titled DC Auto Group C/O John Doe.

If they default I go get it because it was mine the whole time..

And at the end they can turn it in and get part of their security deposit back or can opt to buy it for a predetermined price.

He said BHLH is without a doubt the way to go.

And federal law says that the LESSOR can not be held responsible if the LESSEE totals a car and kills a family and doesnt have insurance.

Thoughts??

 

[cauthen96]

Here is an example..

4000 car my cost.

4000 security deposit..

300 per month for 12 months with the option to buy for 3500 at the end of 12 months..

So I either get 3600 and the car back or 3600 plus 3500..

Also it gives them the chance to get a new car every year..

And there is no interest so that bypasses alot of laws..

AND i can write the depreciation off.. and it spreads the state taxes out instead of paying for 100% of it at the point of sale..

 

[ALLEX]

Holy shit. Pekker's replies on this thread are gold.

 

[richiec]

Thanks for all the input guys!

I have been talking with my lawyer and we are gonna go the "buy here lease here" route..

The BK laws do not apply as its my car the whole time and it will be titled DC Auto Group C/O John Doe.

If they default I go get it because it was mine the whole time..

And at the end they can turn it in and get part of their security deposit back or can opt to buy it for a predetermined price.

He said BHLH is without a doubt the way to go.

And federal law says that the LESSOR can not be held responsible if the LESSEE totals a car and kills a family and doesnt have insurance.

Thoughts??

Double, Triple, Quadruple check that one. And then check it a few more times.
We've had instances where my customer and their spouse have been divorced for a few years, yet they're both still on the title. Wife gets in an accident and badly injures someone, next thing you know, they husband is in court as he's on the title. Now this doesn't always mean that they'll have to pay out, but really check it out just to be on the safe side. Personal Injury lawyers are some of the worst people I've met in my life, at least the ones I've met. Obviously not all are like that

 

[cauthen96]

Double, Triple, Quadruple check that one. And then check it a few more times.
We've had instances where my customer and their spouse have been divorced for a few years, yet they're both still on the title. Wife gets in an accident and badly injures someone, next thing you know, they husband is in court as he's on the title. Now this doesn't always mean that they'll have to pay out, but really check it out just to be on the safe side. Personal Injury lawyers are some of the worst people I've met in my life, at least the ones I've met. Obviously not all are like that

Good looking out brother..

I lease vehicles all the time and they are titled like this..

FORD MOTOR CREDIT
C/O RICHIE C

surely a company as big as Ford Motor Company wouldnt put their ass on the line if they werent covered??

I will double check with my attorney just to be sure!

 

[michael0077]

Wow, great data this forum rocks....I have been watching this thread over the past couple days and you know what I keep thinking IF IT SOUNDS TO GOOD TO BE TRUE THAN IT PROABLY ISnt...something like that u get the idea. Owning your own business to me means YOUR NUTS ARE IN THE VISE EVERY DAY, EVERY MONTH, EVERY YEAR...and if your not able, willing or have the mental fortitude to be COMPLETELY RESPONSIBLE you will fail. Business is like a machine it has to eat ...employees, money, relationships, family, irs, work comp. accountant, bookkeeper, haters, then finally your ulcer..............

 

[richiec]

Good looking out brother..

I lease vehicles all the time and they are titled like this..

FORD MOTOR CREDIT
C/O RICHIE C

surely a company as big as Ford Motor Company wouldnt put their ass on the line if they werent covered??

I will double check with my attorney just to be sure!

In Florida, the insurance requirements are 100/300/50 for leased vehicles

So it's:
$100k per person per accident
$300k total bodily injury per accident
$50k property payout per accident

That is one way they protect themselves.
But your lawyer is more than likely 100% right lol

 

[Pekkerwood]

I disagree about how bankruptcy court treats a lease. Need an example? When they are renting your house and file bankruptcy you cannot evict them without the courts permission which you will rarely get, or get it very delayed. House in your name. Same as car.

PWood

 

[cauthen96]

I disagree about how bankruptcy court treats a lease. Need an example? When they are renting your house and file bankruptcy you cannot evict them without the courts permission which you will rarely get, or get it very delayed. House in your name. Same as car.

PWood

good point brother..I will def go over all the small details with my lawyer just to make sure..

thanks for the input!