The Business of Renting Supercars

This guy rents out supercars and makes 800k. This is what we're talking about this week. This is a guy who's living every teenage boy's dream. Fast cars, Miami beach lifestyle and tens of thousands a month in profit. To be young and entrepreneurial in America today has actually probably never been a better time than right now. So Today, in like 10 minutes, we're gonna dive into race car rental. How to rent out supercars, break in some cash, carbitrage, car supply and demand and why it's sort of off balance. Right. And then lastly, how we're playing this market. I think this is going to be fun. Today we're going to talk about money. All right, how do I know inflation and market bubbles are here. Well, race car rentals tell you the whole story. You can buy a lambo new for 200k ish and then rent it out for big dollars. And finally you can turn it around and after you've rented it out, put more miles on it, done more things to it, you could sell it for 220,000 to $250,000. That's a weird supply and demand imbalance. He's calling it carbitrage. Let's break down how one guy does the rentals, how another guy buys the supercars for the wealthy and takes a cut. And finally, how you too can carbitrage, especially here in Miami. Three ideas for making money from cars. Idea number one. I met a guy in Miami, he rents out 30 supercars. He makes 13 to 40k a month per car. This 30 something is living every 16 year old dreams, buying luxury whips, renting them out, resell them for profit. I sat listening to him explain the business model and one line really stuck out to me. He said something along the lines of what if you could buy a supercar with a loan, AKA somebody else's money, put a fraction down, rent it out for tens of thousands a month and then sell it for more than you bought it. That's what he says he's doing. To which I reply, tell me more and it'll be our secret. Slash my tens of thousands of contrarians will hear about it. Well, pre Covid, he was dreaming about driving these bad boys while watching YouTube videos. Now he's executing he saw market opportunity in Florida. With the massive amount of high tax state transplants moving and record tourist levels, there was a shortage of rentals. And that fast paced lifestyle is perfect for Miami. They like shiny objects. So he thought, okay, I could probably buy the cars. I've been obsessing about for decades, Rent them to other people, drive them by myself, and maybe make a little money doing it. But he didn't think he was going to make this much. He put up a website, some images, got a loan for a supercar. You'd probably need like a decent credit history or a backer for this potentially. But then he started offering rentals. That led to a business he now oversees, but spends, candidly not much time on the model in action. He bought a 2011 Rolls Royce Ghost in October. $109,000 with warranty, retails for 129k. I guess he got a deal. He rented it out during the busy season in Miami of November to May for on average $1,200 a day. Just is crazy. Who is he renting this out to? People who own NFTs. His ghost is out 13 to 30 days a month. In slow season, that's 7 to 8 days a month. So that means he's making 15k to 30k a month revenue on one whip. Let's break down the profit and see what he's actually charging overhead. Storing cars pretty cheap. 100 to 300 bucks in Miami. Delivery driver who does drop off and pickup costs 25 bucks both way. Pro tip clip client pays 150 each way and then he pays the worker about 25 bucks. Maintenance, 1k to 2k a month. But usually under warranty insurance, 100, $200 a month. I couldn't believe it was that cheap. Tires expensive? Actually 500 bucks to a thousand bucks a month or so on average. That means his profit is 9 to 29k. I thought that was fascinating. He did say there's one problem, which is that often people try to steal the cars. So he also has to have AI. And the guy, well, he follows these people and I guess gets the car back somehow. But when they do that, he actually has a charge for them and he has a hold that he puts on the credit card for people. So even if his big scary guy comes after you, you're paying for it. What's interesting though is this gent has not one car but 30. That's 300,000 to $870,000 per month. No wonder he's such a fast talking, smiley dude. Now the downside historically was that supercars and exotics depreciate about as quickly as a, I don't know, a used wedding dress. So in a normal market, 50% of the profits would be eaten away by depreciation. Aka the car is worth less today than when you Bought it. But in today's market, he makes money flipping them wild. We're gonna get to that. Now, idea number two is don't buy for you, buy for them. This guy's name is Sahil of RPSS Group llc. He comes from a long line of Indian entrepreneurs and hustlers. His words, not mine. And he's loved cars from a young age. What guy doesn'? Yes, I never really got it, but okay. But obviously cars are a pricey mistress. So he started researching how he could be around dream cars without having to buy them. And he went to local dealerships near where he grew up and developed relationships. He would help any connection that wanted to buy a luxury car so he could get facetime with the salespeople and managers. Essentially, if you're super rich, you don't have a lot of time. You want to buy a car. Buying a car. I mean, how many of you guys have went and bought a car? It's terrible. It's the worst. So he does it for you. That turned into a pretty big consulting business. All focused on finding the cars, dealing with the headaches, those hot dogs at the car salesman lot all around, working with the wealthy and getting wild whips without the headache. Now he's bought and sold for investment 150 luxury cars. And Sahil's got a few for himself. I'm just telling you perks of the business, I guess. But the model makes sense. You buy a car in a lower ring of Dante's Inferno, even when you're spending hundreds of thousands of dollars. Sahil cures that pain for the big timers. He acts as the middleman between the dealer and the seller, negotiating the best deal warran add ons. As well as finding you that perfect lime green Lambo or whatever the kids buy these days. For his help sourcing and dealing with the hellacious pain of a used car Salesman, he gets 2k retainer and 15% of the total purchase price. So if he helps you buy this $489,888 Ferrari Spider, he makes $74,833.20 to be specific. And 2,000 up front. So he makes $76,000 when you buy a car. Now, I don't know if you're thinking what I was thinking, but why in the world would anyone pay an entire year's salary for one car purchase when I can find them myself? Well, when you buy at this level, the game is a bit different. Oftentimes you can't even buy the cars without connections. This Blew my mind. The average wait time on a custom Ferrari according to Sahil is five years. Think about that for a second. I got a million bucks, I want a hot whip. Ferrari says, awesome, we'll sell you one in five years. Sahil also negotiates the add on packages, the purchase price and warranties. His game is that if they could find a better deal out there without him money back guarantee. So if you're likable and have good connections, happy to wheel and deal with car salesmen and know a thing or I guess 27 about cars. Maybe car consultant is your new business card for me. I'd probably just hire Sahil and so I was just wondering Sahil, do you do any deals on Hondas? Because that's what I'm in the market for. The third idea I have about cars is what we talked about earlier. Carbitrage. I love naming things. Now this model I'm testing out, let me show you 101 lesson on supply and demand. Cars are massively in demand. Supply is massively limited. What happens in that kind of market? Well, the price goes up to meet the demand. Case in point, my husband and I went out to go buy a Tesla. I mean we moved to Austin. We're here for like a year. What do we do? We turn into tech Bros. Buying Teslas. But other story there is essentially it costs more to buy an old Tesla than a new one. Wild then I thought is this an isolated incident? It's the same with Porsches which are an eight month waiting list. The problem all starts with the delay in new car manufacturing. There were 3.3 million cars in lots last year. In 2020, this year. Do you know how many there are? 970,000. That is one third of the inventory. Why? Chip shortages. There aren't enough chips. Not those kind of chips. There aren't enough of these kind of chips. These are the electronic components of cars. Why? Because carmakers shut plants during COVID 19 pandemic last year. And these chips are used in laptops, gaming consoles, that cool Oculus leading to tighter inventory. We also bought more cars than expected last spring. Then we got the Chinese. Let the rock tell you in Chinese. Chinese. The sanctions against the Chinese tech companies have further exacerbated this crisis. I guess my Tesla crisis. Which means for now too many people want whips. Not enough people are going to get them. Eventually that supply and demand curve will equalize. But in the meantime, this is wild. There are Hyundais. Hyundais, Hyundai going for 10k over asking for an old one. The new Mercedes GLE they're sending without GPS. Those things are cheap because they're out of chips and they're just gonna insert it later. Rolls Royce has a 3.5 year waiting list for a customer. Standard Rolls Royce wait time is 15 to 18 months. That's about 2x. And a 219 rolls Royce with 30k miles on it is going for 40k more than a brand new 2021 version. The industry expects these shortages are going to kind of get cleared out this year in 2022. But I don't know. Have you seen all those ships waiting outside California? But for those of us who want, you know, a little risk in the game, maybe the only thing to flip isn't houses. Your Instagram game is about to be lit with all these hot rods that you're actually making money on. Well, I can't promise you anything. What do I know about cars? Question everything. We'll see you here next week. Oh, if you like this, hit that follow button or ring that bell or whatever you're supposed to do.