protect your money and never overpay again by Following This Bulletproof formula (part 5)
Of all the things you're going to learn today, this just might be the most important lesson.
In fact, this one concept alone has allowed me to continuously build wealth in an array of industries: real estate, art, luxury timepieces, wine, and cars of course.
I call it "Bottom Cash Value".
It basically means...
The absolute lowest value a car will drop to based on time, condition, and demand.
Make sure you understand that. Read it again.
In the context of car hacking, we want to buy cars as close to bottom cash value as possible as you saw previously.
When you do this correctly, you safeguard yourself from overpaying, but also reduce any potential risk of losing money.
This allows you to recapture all your money out of the car (sometimes even for more) when it's time to sell the vehicle.
It's not just buy low, sell high either.
Because you don't know what the dealer considers low.
By finding the bottom cash value, we're able to make educated offers that are more likely to be taken seriously.
To understand this concept better let's use an actual car like the fantastic 2016 Porsche GT3 RS.
Back in 2016, you'd be lucky to score one of these at all due to insane waitlists and ridiculous mark-ups.
Years later, these have flooded the pre-owned market with prices around $200,000.
For a car that had an MSRP of about $200,000, the Porsche GT3 RS is still holding strong.
Let's see how the bottom cash value plays into car hacking...
The current bottom cash value of a 2016 Porsche GT3 RS these days is about $175,000.
If you buy this car at $185,000 then you would be over exposed and risk losing -$10,000.
If you buy this car at $170,000 then you are protected and have the potential to gain +$5,000.
Your "magic number" is to be as close to the bottom cash value of $175,000 as possible.
It's no different than trying to buy a house below market value because appreciation is never guaranteed.
So if the economy does collapse the housing prices, your money is still protected because you never overpaid to begin with.
This is how I made a lot of money in real estate back in 2008 while others went bankrupt.
So now that you know why bottom cash value is important, let me show you how to easily get this number.
Where do people usually go to when they want to sell their car fast?
They might not make you the best offer, but you know they'll be ready to cut you a check on the spot if you ever needed to sell.
We're going to use the same strategy to get our bottom cash value number, but with a slight creative twist.
Since CarMax doesn't know anything about luxury and exotic cars we don't waste time with them.
Instead, what we do is find other dealers who deal specifically with luxury and exotic cars.
• They can be manufacturer authorized dealers.
• They can be local or anywhere in the US.
• They can be strictly a high-end used car dealer.
Just Google some if you have no idea or search for cars and see which dealers specialize in them.
Once you've identified a dealer, look on their website and you'll see a trade-in form like below...
By submitting this form, they will give you an offer to purchase your car from you based on the information you provide.
What you need to do is fill out the trade-in form with a car similar to the car you want to buy.
For example, if you want to buy a 2014 Audi R8 V10 6-speed manual then you need to find a different 2014 Audi R8 V10 6-speed manual at another dealer with similar specs.
Submit the form and wait for them to get back to you with their trade-in offer.
If you're not scared to pick-up the phone, it's even faster to call them.
Here's a script that usually works...
“Hey Mr. Dealer, I have a YEAR MAKE MODEL for sale on consignment at another dealer and I am looking to move it. Here is the VIN number. Please let me know how much to take this car off my hands today.”
Repeat this process with at least five different dealers until they all respond.
It will look something like this...
• Dealer 1 - $88,000
• Dealer 2 - $76,000
• Dealer 3 - $82,000
• Dealer 4 - $74,000
• Dealer 5 - $80,000
The average of the five trade-in offers becomes your bottom cash value number.
In the example above, our target bottom cash value number would be $80,000.
This is useful because we don't know how much money a dealer has in a car, but we can safely assume it's around what the bottom cash value would be.
By knowing the bottom cash value, it gives you leverage and the confidence to know that you're reducing your risk exposure.
When you nail this right two outcomes are possible:
1) Best case scenario: You have a cushion of equity in the car, meaning that you can sell it at anytime for more than you paid.
2) Worst case scenario: You sell or trade-in your car and recapture all of your money back.
I haven't even gotten to the best part yet...
Most people think you need a million bucks in the bank to buy an exotic car.
According to Experian the average car payment is $554 for new cars and $391 for used cars.
What if I told you that you could actually have lower payments and be driving a Maserati or an Aston Martin without needing to put down any cash?
On the next page I'll show you how you could be driving an exotic for as little as $300 per month with real examples.
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DISCLAIMER: The results stated above are my personal results. Please understand my results are not typical, I’m not implying you’ll duplicate them (or do anything for that matter). I have the benefit of practicing car buying for over 10 years, and have an established following as a result. The average person who buys any "how to" information gets little to no results. I’m using these references for example purposes only. Your results will vary and depend on many factors …including but not limited to your background, experience, and work ethic. All business entails risk as well as massive and consistent effort and action. If you're not willing to accept that, please do not continue.