Repo which is a short form of repossession, is a “self-help” type of action – mainly in the U.S. – in which the party having right of ownership of the property in question takes the property back from the party having right of possession without invoking court proceedings. The property may then be sold by either the financial institution or third – party sellers.
Various objects can be repossessed, but most repossession agencies focus on car repossession. The repo agent normally uses a tow truck or pickup truck with a special towing attachment called a boom. They also may obtain the key from the car owner.
The agent must be careful however, because they cannot cause physical harm to the vehicle. Usually, the vehicle owner must be notified of a repossession. The repossession agent will find the car and check its information such as the Vehicle Identification Number (VIN) to make sure they have the right vehicle.
If there is a match, they will attempt to hook up the car to the tow truck and tow it away or pick the lock and drive it away. If you are considering starting a repo business in the United States, you are likely not going to get it wrong because there is a ready market for the services you will be rendering.
The Estimated Cost Breakdown to Start a Repo Services Business
When it comes to starting a repo services business, the major areas that you look towards spending the bulk of your cash is renting or leasing an office facility in a conspicuous location, purchasing your operational vehicle and towing truck. Aside from that, you are expected to pay your employees, pay your utility bills, maintain and fuel your official cars.
This are the key areas where you are expected to spend your startup capital on;
- The total fee for registering the business in the United States of America – $750.
- Legal expenses for obtaining licenses and permits as well as the accounting services (car tracking software, P.O.S machines and other software) – $3,300.
- Marketing promotion expenses for the grand opening of the Repo business in the amount of $3,500 and as well as flyer printing (2,000 flyers at $0.04 per copy) for the total amount of $3,580.
- The total cost for hiring a business consultant including writing a business plan – $2,500.
- The total cost for the purchase of insurance (vehicle insurance, general liability, workers’ compensation and property casualty) coverage at a total premium – $5,500.
- The cost for payment of rent for an office space with large parking lots for 12 months at $1.76 per square feet in the total amount of $85,600.
- The cost for remodeling the office facility (construction of racks and shelves, painting and beautification) – $15,000
- Operational capital (fixing damaged cars and other cost incurred during repo services) – $50,000
- Other start-up expenses including stationery ($500) and phone and utility deposits ($1000) – $1,500
- Operational cost for the first 3 months (salaries of employees, payments of bills et al) – $45,000
- The cost for start-up inventory (stationery, printing papers, and refillable ink jacket et al)- $800
- The cost for front desk office equipment (cash register, security, ventilation, signage) – $750
- The cost for the purchase of pool cars and towing trucks – $70,000
- The cost of purchase and installation of CCTVs and car trackers: $4,000
- The cost for the purchase of office furniture and gadgets (Computers, Printers, Telephone, TVs, Sound System, radioing gadgets, mobile phones, tables and chairs et al): $7,000.
- The cost of launching a website: $600
- The cost for our opening party: $3,000
- Miscellaneous: $5,000
From the rough estimate as listed above, you would need a minimum of three hundred and three thousand eight hundred and eighty USD ($303,880) to establish a medium – scale but standard Repo services firm in any city in the United States of America. Please note that this amount includes the salaries of all the staff for the first three months of operation.
Please note that this is a rough estimate and we usually advise our readers to go to the market or directly contact wholesalers and suppliers of all you need in order to get the real time prices of these items. The truth is that if you are a good bargainer, you can get a better deal that will help you beat down the estimated price as listed above.
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