I’d like to buy trade-ins from local dealers, or perhaps other auto auctions, so that I can later re-sell them for cash. Do i need to incorporate as a business at first? Do i need licensing? I’m currently in North Carolina.
To do either you need to be a dealer.
To be a dealer you have to jump through all kind of hoops, the biggest of which is getting garage liability insurance ($2000-2500 per year) and a place of business with a sign.
And getting a bond & license fees are least expensive of your concerns.
My suggestion would be to try to buy & sell on your own, out of the newspaper and unless you can make money on a regular basis do not bother with getting licensed.
Trust me, cars often sell for less out of the newspaper than dealer auctions so if you cant buy & sell out of the newspaper on your own, you don’t need to spend the money to be a licensed dealer.
Try to buy & sell cars with "open titles". Yes, its technically illegal. Its very, very rare for anyone to get in any real trouble over it.
Worst case scenario is you get taken to court, you tell the judge you didn’t know and he puts you on probation and tells you not to do it again. But that rarely, if ever, happens.
TRUE STORY…
I was a licensed dealer and often bought cars out of the newspaper.
One friday, I bought a truck for $1400.
I sold it a few days later for $2900 (My biggest profit ever in 12+ years in the car business).
A year later, I saw the same truck with 20,000 more miles bring $3250 at a dealer only auction. The buyer paid a buyers fee on top of that.
My advice, don’t become licensed until you have proven to yourself that you can profitably buy & sell cars you obtain elsewhere. You CAN buy cars for wholesale & below on the street. I used to do it often.
Now, after you get to selling 2-3 a month for a few months you can make the case for spending what it would to become a licensed dealer. The overhead just kills your chances of keeping your profit.
