Learn me being a used car dealer.

I've been thinking for a while now about getting more heavily into the used car flipping/selling field. Legally I'm only allowed 3 sales a year as a regular Joe Schmoe, so unless I start curb stoning (not gonna happen) I need to get my dealers license. Unfortunately it's not like getting a realtors license and just running things out of my house. Looks like it'll be quite an investment with having to get an actual lot and all the taxes, fees, insurance that goes along with that.

So this is just an open invite to pass on any knowledge you can to me, the starry eyed Wheeler Dealer dreamer. Especially anything pertaining to Florida requirements. What kind of capitol should I be looking at to get into this with?

Thanks

I thought FL allowed 5/year. Has it changed to 3/year now?

If you're married, and it's still 5/year, that's 10 between the 2 of you.

To jump from that to an actual license becomes pretty pricey IIRC.

most states i believe require you to carry all the expenses and trappings as a dealership with a physical location.

http://corner-carvers.com/forums/showthread.php?t=42327
http://corner-carvers.com/forums/showthread.php?t=28809

I did it for a year in SC. 12 titled in one year. Doing it without a license does put some issues on profit, but it is cheaper than getting a dealers license depending on your state.

SC had some interesting dealer laws. One of them was a building that held files associated with vehicles to be sold and could hold a person and a minimum dimension gravel or paved lot to display vehicles on. I was renting an apartment in college.

I went to register my 2nd over limit car that year and woman said "I can't register this, you have bought and sold too many. You have to become a dealer." Me: "Great!!! I need you to waive the lot and building requirements and I am happy to submit my paperwork." DMV Person: "No sir we won't do that. You need to get what is required to be a dealer." Me: "Maam I don't have the ability to access that in a timely manor. You have to waive those requirements if you want me to qualify as a dealer." DMV Person: "No sir." Me: "Then I guess we are registering this car to me today." DMV Person: "No sir. You have to register as a dealer." Me: "Then we have a problem. The state requires me to register and transfer titles to vehicles that are owned to residents in this state. I am trying to do that and you being the states rep are refusing to do that. The state says if I buy too many cars I have to be a dealer. You are refusing to waive the issues with that happening. Ma'am we have three legal choices here. You waive the building and lot requiements for me to be a dealer. You waive the cap on the max number of cars I can buy and issue me my title and registration, or you or the state of South Carolina can become the proud owner of a 98 Civic." DMV Person: "Please let me have the paperwork sir and I will get your your tag and title." Me: "Thank you."

I was very polite the whole time. I never got excited and never got in anyway made this about she and I.

Those laws are put in place by dealer associations to stifle doing what you are doing. Most of the time no one at the DMV cares (the 3 after that one got titles with no questions asked.)

It is away for the dealers to have a monopoly against everyone else. Same crap with Tesla not being able to be their own dealerships.

You have 3 options I see.
1. Dont start. Nah.....
2. Flip cars and make money and be able to get dealers license.
3. Flip cars and make money and buy State Reps so you can change law.

2 & 3 seem the most fun.

Does Florida require a bond. That was the big expense out here, did not have to have a lot but a storage requirement was in place.

For Colorado, we had to provide proof of a physical location. Plus individuals had to get their dealer license, and technically those who don't have a dealer license are not allowed to discuss cars for sale at all.

Dealer plates are awesome, though. They just make life easier when you're dealing with customer cars and picking up new ones.

Keith Tanner wrote: For Colorado, we had to provide proof of a physical location. Plus individuals had to get their dealer license, and technically those who don't have a dealer license are not allowed to discuss cars for sale at all. Dealer plates are awesome, though. They just make life easier when you're dealing with customer cars and picking up new ones.

You can't sell your own cars?

I can personally sell my own cars, but if I want to speak to a prospective FM customer about a car being sold by by the licensed dealer FM, I need to be one of the trained individuals employed by FM.

Also, if we advertise a car for sale by FM, we need to give it a unique identifier so that it is clear the ad is for a specific car, not just any 1998 Mercury Thunderchicken.

Waiting for pimpm3 to chime in. He is in FL and has been very active on his flips lately.

i believe the 3-car thing is a misunderstanding. 3 cars is a prima facia limit. The state can use you selling 3 cars as an example of you trying to act as a dealer without following the procedures.

then i got this from the state website.

The steps to become a licensed used-car dealer in Georgia include:

Purchase a surety bond worth $35,000, available through your insurance agent. Purchase insurance for your business; liability-only is not acceptable. Obtain a place of business, making sure that the location meets all zoning requirements. Take photos of your place of business that feature the sign and building prominently in the picture. Establish a permanent phone at your place of business, making it easily verifiable; unlisted numbers are not acceptable. Attend a pre-licensing seminar (approved providers are listed in the Used Car Dealer Application online). Acquire your Sales Tax ID Number from the Department of Revenue. Submit a fingerprint background check through the Georgia Applicant Processing Services (GAPS) with the processing fee for a Used Motor Vehicle Dealer License. Pay the $170 application fee, made payable to the Used Motor Vehicle Dealer Board.

In reply to Flight Service:

Actually, Legal Option 4 could have always been, "No, sir, you cannot be exempt from the law. I cannot register this car to you as a private citizen and you refuse to meet the requirements of a dealership. Therefore, kindly have your unregistered vehicle towed from State property, or we will have it removed for you." Although you were polite about it, you were still kind of being a dick.

I did this in FL for a while. You have to take a class, register with the state and obtain a dealer bond, which means passing a credit inquiry and criminal background check, plus not having a history of liens or judgements. You must have a sales location that is not adjacent to or within another automotive facility of any kind (such as a shop). You'd better get insured. Thankfully dealer insurance is not as brutally expensive as garage liability insurance. You must have a dedicated display space. Many guys rent small offices at storage/office parks and mark their parking spot "Parking for Acme Motors Only" or the like. You will not be able to do repairs or maintenance at your business location - the state doesn't want you collecting waste liquids and will not take any chances you could create runoff of any kind.

Once you are licensed it's cake to get auction access. Plan to be a cash buyer because florplanning takes good credit and almost as much cash as buying the unit outright. You will need to incorporate an S-corp or LLC and you must file taxes monthly. The state can and will spot-check your sales book to make sure they are getting theirs. Unfortunately, after you get all the boxes checked, you will probably not make much $ if you are a low-volume seller, so before doing any of the above see if you can find a partner or become an affiliate at a going concern. I did it, it was fun, it was not very profitable, I miss it. My old partner retired and I probably won't be able to afford to repeat the adventure any time soon, to my regret.

You can sell them or buy them. You just can't register them.

Besides, I'm not arguing the justice or injustice of the law. The justness of the law is, frankly, irrelevant. It's still the law. By my estimation, 78% of federal laws are unjust, idiotic, or unnecessary. Does that mean I get to unilaterally decide they don't apply to me?!

I agree, that sucks. I've never run afoul of that law in Delaware, so I don't know our limit. But no matter, it's still the law.

Work part-time at a legit, small car lot. Self pay for what you bring to the lot. Pay a commission if other salesman completes the sale of "your car". Go to auction and have a legit dealer plate.

I'm sure all these restrictions and costs associated with getting a dealer license have NOTHING to do with the lobbying power of the existing dealers and their desire to restrict competition.

I wish there was an Uber or AirBnb for used car sales.

Three vehicles annually in NV as well before you have to get your dealers license. Rather annoying .

nutherjrfan wrote: I wish there was an Uber or AirBnb for used car sales.

What would that look like?

Duke wrote: You can sell them or buy them. You just can't register them. Besides, I'm not arguing the justice or injustice of the law. The justness of the law is, frankly, irrelevant. It's still the law. By my estimation, 78% of federal laws are unjust, idiotic, or unnecessary. Does that mean I get to unilaterally decide they don't apply to me?!

That is the problem. In SC, you have to change the title to your name to be able to say you own it and therefor sell it.

Yeah, my property, I paid the taxes they require on every single one. It is against the states own interests to for me not to title it.

They had no legal ground to seize the vehicle (the law does not state a penalty for going over the limit. Little hint: BS laws are set to pander are the ones with no penalty) They had no legal ground to refuse anything. I am a car guy. There are people on here who buy more than X number of cars a year because they like cars.

The level of E36 M3 seizing that vehicle would have caused is beyond anything any DMV ever wants to deal with.

And berkeley all you all that thought them seizing the car was the right thing to do.

SVreX wrote:

nutherjrfan wrote: I wish there was an Uber or AirBnb for used car sales.

What would that look like?

there is a guy, I believe in Charleston but don't quote me on that, that has a dealers license. He rents a lot and lets "you" sell your car there. It works like a consignment, but the benefit is, he has nothing in inventory costs, gets to do financing as a dealer, and the owner pays him a fee (I think it was $100) to sell it there.

Worked well.

Datsun1500 wrote: If you read Maryland law I can't sell more than 3, registered or not. Go figure.

I think it's that 3rd car that tips you into the dealer category. And it's vehicles, which includes trailers, motorcycles, etc.

foxtrapper wrote:

Datsun1500 wrote: If you read Maryland law I can't sell more than 3, registered or not. Go figure.

I think it's that 3rd car that tips you into the dealer category. And it's vehicles, which includes trailers, motorcycles, etc.

you guys are making me happy that i live in ohio. it was 7 at last check per person, i've never had an issue and sold up to 6 in a year. plus that means i can sell 7 and my wife can sell 7 technically, so that's 14 a year, more than i would probably ever do unless i started getting really serious flipping CL cars that need simple repairs. that's worked well for me in the past, as well as buying classics that generally get stored for winter right before winter when nobody wants to buy a car to store it.

Tom_Spangler wrote: I'm sure all these restrictions and costs associated with getting a dealer license have NOTHING to do with the lobbying power of the existing dealers and their desire to restrict competition.

They probably don't. There are literally hundreds of thousands of dealerships across the U.S. I can't think of a more highly fragmented industry. Nevermind the fact that any private party selling a car is technically "competition."

Bear in mind that some states offer two tiers of dealer's licenses.

Dealer-to-dealer: Waives the property requirements, allows you access to auctions, but you can only sell vehicles to other dealers.

Typical dealer's license: Requirements for property, signage, surety bond, etc. Lots more overhead, much more expensive.