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NOTABLE! How to Buy A Ferrari for $20K

biophase

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So a few weeks ago I'm looking at this 2006 Ferrari 360 Modena in red with nice wheels. Asking price is about $100k. I'm not one to spend $100k on a car, because every time I've had money I've put it into investments. So my other thought was I should just buy an investment condo which returns about 8% per year.

But then I came across an ecommerce store for sale for $100k which puts out $100k a year or $8k a month.

This got my thinking. Why would I ever pay $100k cash for a car or buy real estate if I could purchase online stores like these?

So I did some numbers and I could do the following:

Buy the store for $100k
Take the $8k monthly
Which is $6k after taxes
Buy a Ferrari with $3000/mo payments
Buy a home with $3000/mo payments
Why wouldn't this work?

And why doesn't everyone do this?

Poke some holes in this plan please or else I'm going to implement it this year. :)
 

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snowbank

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And why doesn't everyone do this?
Their fear of failure along with their lack of knowledge outweighs their untrained logic, and keeps them from acquiring knowledge that would reduce the fear of failure, leading to action, which would lead to ferraris.
 

Inphinity

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"Most" people haven't got the $100k to outlay to begin with, "most" would struggle to borrow $100k to buy anything but a house, and "most" would struggle to manage any business, even a mostly automated website, and would probably send their "investment" nosediving.

But then, that's what it's all about, isn't it - being different than "Most" ;)

Doesn't matter whether it's a website or not, on 1 $100k investment and $8k/month thats a 96% annual ROI - anything that can be maintained consistently at anything near that level is worth investigating imo.

But is the $8k/mo revenue or profit? I'd be amazed to find anyone who'd sell a $96/year profit business for $100k, unless it requires an awful lot of effort to maintain or they feel it's close to dying... or they have no idea what they've got? hehe
 
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biophase

biophase

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"Most" people haven't got the $100k to outlay to begin with, "most" would struggle to borrow $100k to buy anything but a house, and "most" would struggle to manage any business, even a mostly automated website, and would probably send their "investment" nosediving.

But then, that's what it's all about, isn't it - being different than "Most" ;)

Doesn't matter whether it's a website or not, on 1 $100k investment and $8k/month thats a 96% annual ROI - anything that can be maintained consistently at anything near that level is worth investigating imo.

But is the $8k/mo revenue or profit? I'd be amazed to find anyone who'd sell a $96/year profit business for $100k, unless it requires an awful lot of effort to maintain or they feel it's close to dying... or they have no idea what they've got? hehe
It is $8k/mo profit. This is really not an investment as it does require time to run the business. However, the amount of time required would be about 2-3 hours a day.

BTW, this can be done with $10k. You can purchase a business that makes $1k/mo for $10k and pay for a $400/mo car or whatever else you may want.
 

Brootal

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Biophase- Do you have the experience necessary to keep the online store that profitable? Could you hire someone else to do it and grow it?

If I were doing the same thing, that is what would take me a while to consider. I have never really run anything online and would need someone i could trust to help me take it to the next level (or just keep it running smoothly).

This is really intriguing though. Please keep us updated.
 
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biophase

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Biophase- Do you have the experience necessary to keep the online store that profitable? Could you hire someone else to do it and grow it?

If I were doing the same thing, that is what would take me a while to consider. I have never really run anything online and would need someone i could trust to help me take it to the next level (or just keep it running smoothly).

This is really intriguing though. Please keep us updated.
Yes, all I do is run online stores. I can definitely keep it at its current level, but I am sure I can improve it also. I would hire someone to run the day to day and I would work on growing it. It's not really difficult to keep a store running smooth, but you have to put time into it.
 

kwerner

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I asked a similar (hypothetical) question about a month ago in another thread, but having a specific example to go off of, like the one you provided, really helps.

I think it makes sense to do things this way; if the numbers work and it's worth the time investment for you, go for it! Really like the new avatar pic by the way.
 
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Rickson9

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Speaking for myself, I wouldn't pay more than 5% of my net worth on a car. A car, and a salary, are the two fastest depreciating assets for the typical individual.

You need to be fairly good at reading and interpreting financial statements before buying a private business. It's not a game for the financially illiterate. Ask for 5 years of income statements. Then pour over them.

Best regards.
 

Jonleehacker

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I guess the question is, if you are seeing this as a slam dunk, what is the seller seeing?

Why would someone sell a website for one year's profit, when they could hang on to it and keep the asset and the income.

Personally I wouldn't sell for that valuation, and I doubt you would either. If you can figure out the real reason that the seller is selling then it may be a deal.

In general markets are efficient. The reason, as I understand it, that websites sell for such low valuations is that profit in web based businesses can be highly volatile and fragile (one Google engineer's bad day away from a 50% drop in income).
 

max momo

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I think JLHacker nailed it. If the business is so great/passive income w/ that killer markgin, why sell it?

How many times has someone here posted the story about how they bought a business and:
a. the numbers were fudged - even the bank blew the valuation
b. undisclosed weakness that are not recoverable in court (only finding that out after legal money flushed down the tubes)
c. unrecognized shift in market trends (which is why the seller sold out)

Based on my only experience trying to buy someone else's business - I am now a big fan building my own.

Good luck either way!
 
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biophase

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I guess the question is, if you are seeing this as a slam dunk, what is the seller seeing?

Why would someone sell a website for one year's profit, when they could hang on to it and keep the asset and the income.

Personally I wouldn't sell for that valuation, and I doubt you would either. If you can figure out the real reason that the seller is selling then it may be a deal.

In general markets are efficient.
There are alot of deals out there. I wouldn't have believed it either until the last 6 months where I've been looking. My friend bought a store for $5k which makes $1k a month and it is consistently making $1k a month. There was another store making $25k a year where the guy was asking $15k.

Just like with houses and anything else for sale, these deals aren't on the open market. You have to search for them, find motivated sellers. These sellers were tired of running these businesses and wanted out.

With regards to evaluating ecommerce stores, it's fairly simple to see if their profits and what they claim are legit. You can review their traffic, checking their rankings and see their admin panel. I feel very comfortable looking through this data.

Even on flippa or bizbuysell there are tons of stores for sale at 1x-1.5x. You just have to sort through the crap to find the good ones.

Then next thing you need to decide is if you can improve them. If a store is making $50k and all its search terms are on page 2 of google and they are running heavy PPC, there's alot of room to increase traffic and lower costs. You could probably take that $50k store to $75k just by shifting PPC costs to SEO.
 

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biophase

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Speaking for myself, I wouldn't pay more than 5% of my net worth on a car.

Best regards.
Which is exactly why I'd spend the money on a business and then have it buy the car. :)
 

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I do this with my houses every time. If I want a car I buy an asset that will pay for the car and then some. Seems like a no brainer to me.
 
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biophase

biophase

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I should have titled this thread "How to buy a Ferrari for $20k". I bet there would be way more views. I thought I had just done this last week. Unfortunately, the deal didn't work out, but the gist of it was that I was going to pay $20k for 25% of a store that made $8k a month. I was going to take the $2000 a month and get that Ferrari. Would have been a sweet deal if it had worked out because I also wouldn't have had to work the day to day.

In hindsight, maybe we could have increased the offer, but I was in Peru and couldn't counter.
 

TK1

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Q: Where did you get this deal from?

My 2 thoughts:

a.) If the numbers you stated are valid the biz price would be 3-5x from the 100k mentioned - nobody on earth will sell a valid working business that makes 8k per month net for 100k IMO

b.) the numbers - the owner are not valid / the business is struggeling whatever

If it sounds too good to be true..... :smug2:
 

JEdwards

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So a few weeks ago I'm looking at this 2006 Ferrari 360 Modena in red with nice wheels. Asking price is about $100k.

Poke some holes in this plan.
Small hole, they didn't make the 360 in 2006.... and there are no 2006 ferrari 430's for 100k. Probably a typo.

Also if you can find a businesses that creates 100k in profit a year and buy it for 100k. I can get you 1 million tomorrow and we can buy 10 of them. < I am not kidding.
 
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biophase

biophase

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Small hole, they didn't make the 360 in 2006.... and there are no 2006 ferrari 430's for 100k. Probably a typo.

Also if you can find a businesses that creates 100k in profit a year and buy it for 100k. I can get you 1 million tomorrow and we can buy 10 of them. < I am not kidding.
Sorry I meant to say 2003 360. Although a 2006 430 would be nice instead. ;)
 

CEBenz

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First, I mean this with the utmost respect,

But using a business to buy a car and/or real estate is sort of a big fat DDUUUHHH!

I know most of you read MJs book and most of you even read Kiyosakis RDPD, and now suddenly the light kicks on? Good grief. Maybe MJ should have written his book in the form of a 4' long 2"x4" to beat you guys over the head to pound into through those skulls.

Please don't be offended by that. I know Jack knows it.

Biophase, IF the due diligence checks out, I think I'd pull the trigger. Things I'd want to know are:

-Why is the seller selling?
I can see maybe he has too many irons in the fire and is cutting his lower producers. Maybe he fudged the numbers. Who knows for sure. How old is the business? When was the domain first registered? Look for flags.

-What does the market look like? Is it growing or shrinking?

-What does it use for marketing?


And me personally.....I want a hint on where you're finding these things. lol

And Biophase....another Ferrari to check out is the 550 or 575m Maranello. Fr engine/ rear drive w/V12
Andretti was clocked on a track in Texas doing 193mph in a full road going version with AC and traction control.

Speed for everyone in the thread +++
 
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biophase

biophase

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Q: Where did you get this deal from?

My 2 thoughts:

a.) If the numbers you stated are valid the biz price would be 3-5x from the 100k mentioned - nobody on earth will sell a valid working business that makes 8k per month net for 100k IMO

b.) the numbers - the owner are not valid / the business is struggeling whatever

If it sounds too good to be true..... :smug2:
You know I am kind of shocked to see that people just don't believe that you can purchase businesses at these multiples. Isn't a real estate house flipper doing the same thing? These deals are out there. Cold calling businesses work, you never know who's sick of their business.

Did you guys see this post by zen******* on another thread? His metrics are very close to what I'm seeing. Notice he mentions a $500k site going for 1x.

https://www.thefastlaneforum.com/web-businesses-internet-marketing/31105-website-valuation-question.html

I purchase sites on a regular basis. I only buy Profitable ones,
Here are some rule of thumb metrics I have developed

The Pluses
+ if there is a great domain name
+ if there is consistency in profit and traffic
+ if the site is doing over 50K yr in profit
++ if the site is doing over 100K yr in profit.

quick metrics,
site profits under 10K yr .8X of earnings (8K)
profits under 25K yr 1x earnings
Profits between 25K -50K 1.2x
Between 50K - 100K yr 1.5-1.8x
100-200K yr 1.8-2.2x
200-500K up to 3.5x
1M+ regular M&A Standards


DISCLAIMER these are MY metrics based on years of buying deals, industry knowledge, and a whole TON of additional information that I use for valuing sites. but just quick metrics. Flippa is a good place to get a pulse of the market, but not the best place to buy IMHO. Most of the deals I buy are private negotiated deals.

to be honest, I Have seen some really good sites go for 1x that were in the 500K range. deals like that are more dependent on seller motivation, and buyers quickness in cash.

All these sites BTW have their own products and services. they are NOT affiliate related sites, They are NOT advertisement based income, they usually follow a singular direct response model.

that's a quick answer, Hope it helps. PM me if your really interested in buying sites. there is just to much info for a single post
 
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biophase

biophase

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First, I mean this with the utmost respect,

But using a business to buy a car and/or real estate is sort of a big fat DDUUUHHH!
Well then how would you buy a car? You have $100k in the bank. If your answer is to not buy it then I don't want to live like that.
 

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biophase

biophase

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Bit of advice, don't drive a 430, cause if you do, you will not like the 360 any longer.
Yeah probably. :) When the times come I'll have to see where the market is for these cars.
 

CEBenz

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Well then how would you buy a car? You have $100k in the bank. If your answer is to not buy it then I don't want to live like that.

No my answer is to do exactly as you're thinking. Spend the money to buy the business and then use the business to pay for the car and/or real estate. Exactly like youre contemplating doing.

And some eye candy for the thread

575


360


and a 430
 
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biophase

biophase

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No my answer is to do exactly as you're thinking. Spend the money to buy the business and then use the business to pay for the car and/or real estate. Exactly like youre contemplating doing
LOL, I read your DUHHHHHH wrong. I guess you mean DUHHHH like it's a no brainer. I read it as DUHHHHH like it's dumb. :)
 
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biophase

biophase

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CEBenz

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This one could fund a nice regular car. You have a site making $1000 a month, first bid is $12,500 or 1x. My guess is that it will go at 15k. Disclaimer: I haven't done any research on this one at all. Could be a dud.

My first glance is that it probably gets 15-20 orders a month. Easily managed in 15 minutes a day. Probably could increase traffic with SEO, maybe run a PPC campaign.

https://flippa.com/135835-Fine-Home-Lamps-E-Commerce-Strore---950-Avg--Monthy-Net-Profit-and-Growing

I'm showing a PR2 on the landing page with it coming up #1 on the google for broad match. at least under the phrase fine home lamps

Actually an interesting niche.
 

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