I love my car. It is exactly what I need. However it is not what I want. When gas prices went up to over $4 a gallon, I decided to purchase a car with cash that was reliable and good on gas. I did not care what it looked like, it just had to last me 2 years, max $2K and around 30 miles per gallon. So I went on craigslist and began my search. I did the following as was amazed how similar it is to finding a motivated seller and purchase an investment property:
1. Searched for the keywords must sell and motivated
2. Sent out a lot of lowball offers, all cash and to purchase fast3. Completed a diagnostic inspection that cost $75 and saved me a mistake on 2 cars4. Talked him down more after the inspection even though the problems were not a concern5. Lastly, I test drove it and talked him down more due to the cosmetic dents, scratches and uncleanliness.
The result was much better than expected. Instead of spending $2K and getting a car that will last me 2 years, I spent $1K and got a car that will last me 5 years. I talked the guy down from $2700 to $1800. Then to $1300 after the inspection, then to $1000 after the test drive. The seller was motivated and due to the cosmetic issues there was little demand. I did not insult him when asking for price reductions, I explained the inspection items and the dents were a turnoff, but would still be interested if it was reflected in the price. Once I got an OK for a price reduction, the negotiation began and the seller said Yes to every price reduction request. Even though my car does not impress people, it is exactly what I need. I love getting into that car everyday knowing that I got an incredible bargain, just like we do when purchasing investment properties. With 1K in body repairs the car would be worth 5K. With purchase of 1K, and if I chose to do 1K in cosmetic repairs, the car is at a 40% LTV. Not too shabby. I used the same strategy to purchase a laptop. I ended up getting a nice one for $50 and a second one for free along with a really nice laptop bag. It pays to build rapport and get people to like you. I strongly recommend all investors try purchasing an item off Craigslist at a bargain price. It is great practice for negotiating and learning how to find great deals. Once I have enough money to purchase my dream car with cash, I will do so. But for now, I love that I got a better deal then anyone on the road.