I know it kind of sounds like an oxymoron: vehicle investment because as we all know that vehicles are typically money-pits for our bank accounts. We need to insure them, put gas in them, and repair them on a regular basis. According to Investopedia, the average cost of owning a vehicle is over $4,000 per year. So how is it that I can be so arrogant in thinking that I will earn money by purchasing a vehicle?
Well, long story short, my dad used to be a car dealer. I saw first hand how he was able to find cars for less than their blue book value, clean them and fix them up, and then sell them to a buyer for a higher price, but still in the range they were willing to pay. To be honest, I wasn’t all that interested in cleaning those cars as a kid, but I loved to search for potential deals. At any chance I got, I would pick up an Auto Trader magazine and search through the pages, hoping to find something with a lower than average price and show it to my dad for him to consider.
My Recent Car Flip
For a long time, I didn’t really have the money to try to flip cars myself (meaning, buy and sell cars for a profit – just like flipping houses), but back in October, I was able to try this tactic all on my own when I bought a 2004 GMC Sierra. The profit margin was supposed to be in the thousands, but unfortunately many things went wrong (the four wheel drive went out, sensors went bad, and I hit a deer). While I didn’t make thousands, I did still net $600 for my troubles, but this time I hope to do better.
The Next Car Flip
It isn’t for certain yet (the owner still needs to work out some details), but I may soon be the proud owner of a 2009 Honda Pilot. Five years ago, this SUV was worth $32,000 and I have the opportunity to buy it for just $8,400.
I have been eyeballing Honda Pilots for some time and have been getting a feel for their value. This Pilot, even though it has 185,000 miles, has been selling for around $13,000. After buying it, paying the sales tax, cleaning it up, and replacing the timing belt, I will most likely have about $9,500 into it, but hope to get at least $12,000 from the first willing buyer. Pending everything goes well, I should be able to clear $2,000 with this transaction, which will get me that much closer to my massive goal this year.
The Main Reason
You might be asking, “What goal are you talking about?” and if you are, my question to you is, “Where have you been???” Late last year, I decided to make a push to pay off the remaining $54,500 of my house mortgage by the end of this year, 2014. Yes, I may be a bit crazy, but I do have a plan to pay off the mortgage this fast, and part of that plan is to buy and sell two vehicles for an additional $1,750. So in theory, I only need to sell this Pilot for $1,150 more than my expenses and I will have accomplished this portion of the plan. It will definitely take some work and patience, but I believe that it is 100% achievable.
What do you think about this plan? Am I crazy? Or do you think I will make some money?
The Weekly Round-Up
As usual, I have browsed around the web at various personal finance article and have ready quite a few that were top notch. Here are some of the better ones from last week:
- 3 Reasons You Should Never Borrow From Your 401k from Dr. Cabler at Celebrating Financial Freedom
- When Frugal Travel Hacks Backfire from Travis at Enemy of Debt
- How to Earn More from Your Side Hustle from Frugal Rules
- Does Renting a Car For Long Trips Save Money? from Eyes On The Dollar
- If You Don’t Change Your Mentality, You Will Never Be Debt Free from Debt Roundup
- Two Ways to Live In Your House for Free: Cash Flow and Principle Appreciation from Financial Samurai
- It’s Not All About Cost from Corey at 20’s Finances
My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.