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I hold a reservation for what promises to be a very desirable electric car. I'm guessing that there will be an active market for marked-up resales after its release, because currently the waiting time for new orders is projected to be well over a year and a half.
The reservation is not transferable, and a transfer of ownership would only happen if indeed there is a buyer who is willing to pay a substantial premium to get the car sooner instead of having to wait in line.
One option is to have a contract with a buyer that specifies a certain premium over what the car costs me out the door and do a transfer after I take possession. Even though there are obvious downsides - such as double the sales taxes and the buyer being listed as second owner, the demand for this car might be strong enough to make this fly. But another downside is that the federal tax credit is lost, since neither the buyer nor I can take it, he, because it's a used car, and I because I would have bought it for resale.
What would be the potential pitfalls of doing a "rent-to-own" agreement, under which the buyer gives a non-refundable deposit equal to my total costs, and then makes 12 monthly payments that are each 1/12 of whatever mark-up we agree on? At the end of the rental period, I agree to sell him the car for a fair price, for which he will incur lower sales taxes due to the first-year value loss of new cars. I on the other hand remain the owner of the car for a year, and since I bought the car to rent it out, I can still claim the tax credit.

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er, most of the people in that line were "true beleivers"  (like you) who could not/would not buy a Model S/X for price ... (more)

RedWolfe01 (Jul. 19, 2017 @ 1:54a) |

More likely used Prius, Leaf, and Bolt will flood the market. People who can afford Model S can also afford to have both... (more)

docjoo (Jul. 21, 2017 @ 11:34a) |

that contradicts your claim. They are going to be selling those older teslas. No one's keeping extra tesla's on hand . O... (more)

rufflesinc (Jul. 21, 2017 @ 12:07p) |

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rated:
Pitfalls? Well,

1)if the person gets into a major accident, you will be sued (Whether or not you got any ironclad agreements) because you are the owner.
2) If you don't get your car by mid next year you might lose the credit as 'T' claims to have presold over 200k of these (200k is the limit of credits)
3) You know you have to declare that 'rental income' right?

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When the hype dies down and everyone asks for their $1,000 back you can get yours back too.

Why would someone who is willing to pay substantially more for this car buy it from you vs. buying either a model S or any other luxury vehicle?

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Re: 2) - I'm pretty far up the waiting line and might have it in November or December.
Re: 3) - Yup, I'm aware of that. But I can subtract the cost of the car, so what's left to pay taxes on is the mark-up only.

Re: 1) That's the one that worries me most. It might be possible to deal with that with separate liability insurance, but then the question arises if the whole exercise is worth it.

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How much of a markup u r talking about? 1k? is it really worth it?
If it's more why wouldnt they get a used model s? not worth the hassle

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Sign of a bubble?

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@ Stubtify - Why does anyone pay a mark-up for any car? Because they want *that* car. There are always logical alternatives, yet there are always mark-ups being paid. Of course anyone can get a Model S for a bit more. But someone might just *want* a 3.

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@ michaelesque It's more of a thought exercise and not worth it for me even at $5k. I have two reservations, will definitely keep the first but it looks like perhaps I might not need the second. Anyway, it is worth thinking about and discussing. A hot market can do all kinds of interesting things as those know who remember when the Miata first came out.

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If you have two ev , that makes charging at home even trickier unless you install two chargers?

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rufflesinc said:   If you have two ev , that makes charging at home even trickier unless you install two chargers?
  They aren't all that hard to install.

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This essentially turns you into a leasing company with all the same risks.

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So you rent it to him for a year.

1. what if he damages the car? Trashes it. puts 80,000 miles on it.? Is he forced to buy?
2. say after the 1 year rental period the price of a model 3 has dropped, the novelty has worn off, etc, and the market value for a year old model 3 is relatively low? What if the buyer decides not to buy and you're left with a heavily depreciated used car.
3. What if he simply doesn't pay the rent. How do you enforce collection?

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forbin4040 said:   
rufflesinc said:   If you have two ev , that makes charging at home even trickier unless you install two chargers?
  They aren't all that hard to install.

  Also with a 200+ mile range you probably wouldn't be charging it everyday so you can easily take turns.  The person that travels less can also use a standard outlet and get about 4 miles/hours which overnight is enough for most commutes.  Also if one person doesn't leave or get home same time it's easier to share one charger as well.  

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Geez, not ANOTHER Tesla thread!

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TeslaModel3 said:   @ michaelesque It's more of a thought exercise and not worth it for me even at $5k. I have two reservations, will definitely keep the first but it looks like perhaps I might not need the second. Anyway, it is worth thinking about and discussing. A hot market can do all kinds of interesting things as those know who remember when the Miata first came out.
  But the Miata was actually a cool car.

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atikovi said:   Geez, not ANOTHER Tesla thread!
Disappointed that nobody is talking about Chevy Bolt?

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TeslaModel3, it's not worth the headache. Unless you live in one of 5 states that do not have sales tax on a car, it's not worth trying to resell it. Renting your car out to someone has a high liability issues. There are better ways to make smart investments. Your plan will probably will only work well if you have a family member that you can trust.

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It's not highly desirable... there will be so many for sale. I have 2 on reservation and my family has grown so I not even sure I will buy any of them. I know like 15 people with reservations and half may not end up buying them.

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Luniz97 said:    I have 2 on reservation and my family has grown so I not even sure I will buy any of them.
  doesn't that mean you should buy both of them?

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You will have to buy a special commercial policy for the vehicle. Regular auto insurance policies do not cover vehicles that are rented or leased to others.

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jerosen said:   So you rent it to him for a year.

1. what if he damages the car? Trashes it. puts 80,000 miles on it.? Is he forced to buy?
2. say after the 1 year rental period the price of a model 3 has dropped, the novelty has worn off, etc, and the market value for a year old model 3 is relatively low? What if the buyer decides not to buy and you're left with a heavily depreciated used car.
3. What if he simply doesn't pay the rent. How do you enforce collection?

 
OP said:   
What would be the potential pitfalls of doing a "rent-to-own" agreement, under which the buyer gives a non-refundable deposit equal to my total costs, and then makes 12 monthly payments that are each 1/12 of whatever mark-up we agree on?

  
  Not to say it's a good idea, but every one of your points was already addressed in the first post.

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Thanks, All, for your well-thought out and well-written insights. I think I agree with almost all of them. I'll just keep both cars.

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fwuser12 said:   Sign of a bubble?
  yup, I say.  

Almost comical now.  People think the reservation is worth something, so they go out and get it, other people see the # of reservation and think it's an indication of demand, so they go out and get more reservation and also bid up stock price.

These threads will serve as an objective lesson in bubble forming 2 years from now.

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Easy for Tesla to correct this.  Make the deposit 5-10k refundable after one year of having the vehicle parked primarily at your main residence on file with a utility company.  As far as making money flipping this I would be too wary of someone getting into an accident and you being liable, although it has a hell of a lot of safety features that should mitigate accidents.

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Topic resolved as far as I'm concerned: Not a good idea.

But reading several posts with a negative tone toward reselling made me wonder: What is so bad about reselling a car one owns and making a profit, if one can? Other that it is someone else making the money and not the ones complaining, what is the objection? Two consenting adults enter into a contract, and both get what they want. Where's the rub? Why would Tesla have to fix this?
This is not an issue of cutting in line. It's a transaction after purchase. I'm sure nobody is advocating giving a car dealer any authority over their car *after* the sale, are they?

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TeslaModel3 said:   
But reading several posts with a negative tone toward reselling made me wonder: What is so bad about reselling a car one owns and making a profit, if one can? Other that it is someone else making the money and not the ones complaining, what is the objection? Two consenting adults enter into a contract, and both get what they want. Where's the rub? Why would Tesla have to fix this?
This is not an issue of cutting in line. It's a transaction after purchase. I'm sure nobody is advocating giving a car dealer any authority over their car *after* the sale, are they?

  i don't think anyone said you can't sell it once you complete the purchase?

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TeslaModel3 said:   What is so bad about reselling a car one owns and making a profit, if one can? 
  
Nothing at all.

I don't think anyone was objecting to your desire to make a profit.    I think most people were  just doubtful it would work out for you.

 

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ZenNUTS said:   
fwuser12 said:   Sign of a bubble?
  yup, I say.  

Almost comical now.  People think the reservation is worth something, so they go out and get it, other people see the # of reservation and think it's an indication of demand, so they go out and get more reservation and also bid up stock price.

These threads will serve as an objective lesson in bubble forming 2 years from now.

  Oh yeah, people like to give Tesla $1,000 for over one year with no interest (more than 50% return if used that money to buy Tesla stock) just for the hell of it.  And now all of sudden, majority of deposit holders are going to pull out because the car doesn't meet expectation from the one revealed on March 31, 2016?  That's comical!

If you think it's a sign of bubble now, why will this bubble continue to form for another 2 years? Seems to go against your belief that there is no demand since # reservation is not a good indicator for demand.

Tesla is delivering what was promised on March 31, 2016. Sure, there will be some people changing their mind.  But majority of people who placed a deposit around March 31st are very likely to go forward with purchase.  If you had stood in line on March 31st, you would have noticed that most people in that line already have Model S or X in their garage or know someone who has one. They are buying another one because they love their Tesla. My intention was to put deposit for one.  But after talking to Tesla owners in the line, I put deposit for 2 cars and I intend to buy them. None of 4 other deposit holders have pulled out.  We are all eager to buy Model 3. So your assumptions that reservation # is not a good indicator for demand is incorrect.  Let's hypothetically assume 20% of 400K+ deposit holders requested a refund, that still more than 320K+  buyers who have given $1,000 deposit.  I wouldn't bet against Tesla and prematurely assume that actual reservation # has decreased from the last official confirmation. As more people are realizing that Model 3 has actually been produced and see the car with their own 2 eyes, the demand for Model 3 will be even higher. In 2018, Tesla stock price will be much higher than $383 (it's current high).

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docjoo said:   
ZenNUTS said:   
fwuser12 said:   Sign of a bubble?
  yup, I say.  

Almost comical now.  People think the reservation is worth something, so they go out and get it, other people see the # of reservation and think it's an indication of demand, so they go out and get more reservation and also bid up stock price.

These threads will serve as an objective lesson in bubble forming 2 years from now.

  Oh yeah, people like to give Tesla $1,000 for over one year with no interest (more than 50% return if used that money to buy Tesla stock) just for the hell of it.  And now all of sudden, majority of deposit holders are going to pull out because the car doesn't meet expectation from the one revealed on March 31, 2016?  That's comical!

If you think it's a sign of bubble now, why will this bubble continue to form for another 2 years? Seems to go against your belief that there is no demand since # reservation is not a good indicator for demand.

Tesla is delivering what was promised on March 31, 2016. Sure, there will be some people changing their mind.  But majority of people who placed a deposit around March 31st are very likely to go forward with purchase.  If you had stood in line on March 31st, you would have noticed that most people in that line already have Model S or X in their garage or know someone who has one. They are buying another one because they love their Tesla. My intention was to put deposit for one.  But after talking to Tesla owners in the line, I put deposit for 2 cars and I intend to buy them. None of 4 other deposit holders have pulled out.  We are all eager to buy Model 3. So your assumptions that reservation # is not a good indicator for demand is incorrect.  Let's hypothetically assume 20% of 400K+ deposit holders requested a refund, that still more than 320K+  buyers who have given $1,000 deposit.  I wouldn't bet against Tesla and prematurely assume that actual reservation # has decreased from the last official confirmation. As more people are realizing that Model 3 has actually been produced and see the car with their own 2 eyes, the demand for Model 3 will be even higher. In 2018, Tesla stock price will be much higher than $383 (it's current high).

  
er, most of the people in that line were "true beleivers"  (like you) who could not/would not buy a Model S/X for price or charging issues.  WHY would anyone prefer a 3 over the S they already have.  It isn't like they are a "classic" car that they don't want to put miles on...

If your theory is right then people with high end Lexus should be lining up to buy the newer body Corolla... hint.. they aren't.  If it is right all those people who could afford $100K vehicles will be dumping them on the market at a 40-50K loss just to spend ANOTHER $40K on a newer Model 3.  LOLOLOL

Maybe a few cases where there is a second driver who needs a car.  Hint - you tell YOUR wife you want to buy her a new car that costs half what your S does and isn't as well appointed...  let me know how THAT works for you.  (bet you who ends up in the 3 and who "loses"  their bad ass S)   Having a second vehicle (likely the less driven) vehicle be gas powered for long trips - keeps that  from coming up. 

So no, not buying it.  If you are the type that buys $100K cars you aren't going to suddenly settle for a $35K one -- unless its for your maid or other "staff" to run your errands with.

We will see how many "used" S's "flood" the market as people downgrade to a Model 3...  ROFL.

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RedWolfe01 said:   We will see how many "used" S's "flood" the market as people downgrade to a Model 3...  ROFL.
 

  More likely used Prius, Leaf, and Bolt will flood the market. People who can afford Model S can also afford to have both S and 3. The people who stood in line was not talking about selling their Model S or X to get Model 3. It will be a second or third Tesla cars for them.

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docjoo said:   
RedWolfe01 said:   We will see how many "used" S's "flood" the market as people downgrade to a Model 3...  ROFL.
  More likely used Prius, Leaf, and Bolt will flood the market. People who can afford Model S can also afford to have both S and 3. The people who stood in line was not talking about selling their Model S or X to get Model 3. It will be a second or third Tesla cars for them.

  that contradicts your claim. They are going to be selling those older teslas. No one's keeping extra tesla's on hand . Or maybe they are. 

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