Buying an exotic to rent it out? good or bad idea

Congrats Josh - where are you based? What car? PICS

 

Bad Idea - don't do it, these guys are going to drive your cars like a rental !

 

I had the same idea of buying a Ferrari as a rental car some years back. But I didn’t do it. Instead I saved my money to own my own F-car.

Besides all the concerns regarding the business case think about the following. Buying a Ferrari to be a rental car for others is similar to marry a hooker to have free sex with her. Even better: Every time she has sex with another guy you earn money…

Markus

 

Buying a car in the UK on finance and then shipping it abroad to use as a rental? - You've got two chances of that happening: Slim and none!























.........And Slim has just left Town!

 

My friend owns an exotic car rental business in Auckland. He has a relatively small fleet of luxury and sports cars:
- Aston Martin DB9
- Porsche 911 Turbo (996)
- Ferrari 360
- Bentley Arnage

He runs it alongside his regular car rental business. From what he has said, the exotic rental side of his business only makes sense because the regular rental business covers all of the costs. Most of the rentals on the exotic side of the business are for a half day (weddings etc) and normally occur on the weekends during the summer, meaning that the cars are probably averaging 20-30% rental usage per year.

You'll also notice that his fleet are older models. That is done on purpose as the number of people willing to pay the rental costs to justify the purchase of a new model is tiny.

There are also a few other problems that you'll run into that will further weaken your already threadbare business plan:

1. Certificate of Fitness costs. Because your car will be available for public hire it will be subject to a CoF rather than the standard WoF. These need to be done six monthly (instead of 3 yearly/once a year for WoF) and are more stringent than WoFs.

2. Warranty issues. Most aftermarket warranties exclude cars that are used for Taxi or rental car purposes so you'll be wearing all of the costs on your own.

3. Depreciation. Good luck getting a decent resale price for your car when people find our that it's been used as a rental. If you think that you can get away without telling them, good luck as it'll take them about 5 seconds to find out that it has previously been CoF'd.

 

The exotic part makes money, but only because of the rest of the business underwrites the costs associated with renting cars in general (Website, staff, office location, storage etc). If he had to pay those costs with the income of the exotics it wouldn't make sense.

Yes, although I'm not sure what manufactures warranties would have to say about a car being used for a rental.

The ownership is not the issue. The issue is that to legally hire out a car in New Zealand it would be subject to the CoF regime. A CarJam or LTSA check on the history of the car would show that it had had CoFs in the past. No amount of changing of ownerships, owning via trusts or even changing number plates would hide that.

You could of course not get a CoF for your car but you wouldn't be covered by insurance and it wouldn't take long for you to be found out by the LTSA and shut down.

You'd also have significant financing issues. No UK financial institution is going to offer finance when the collateral against the loan will be leaving the country and their jurisdiction.

New Zealand finance companies/banks would be reluctant to lend to an entity like this unless you have a strong business plan and/or a bankable track record, or significant assets to use as collateral.