Rise and shine, it’s bacon time!
Facebook is funny. It gives you unique insight into people’s lives — people you may know intimately or barely at all.
Last week, I came across an eye-opening post by a “Facebook Friend.”
He was more of an acquaintance (hopefully, someone I can call a friend now); we spoke one time, for roughly 15 minutes, over a year ago.
Today, I want to share a sliver of his story.
The McLaren story
Ever since Michael McDonnell was a kid, the McLaren MP4-12c was his dream car. How does such a specific model of a foreign carmaker leave an impression on a 10-year-old boy from Stroudsburg, Pennsylvania? Like anything else: video games.
Seventeen years later, Michael bought his dream car.
He didn’t win the lottery. He didn’t receive a massive inheritance. He’s not a banker, doctor, or lawyer with a seven-figure salary and a mountain of debt. He’s a simple guy that lives by a set of simple, yet empowering principles.
Funny enough, he almost didn’t buy the McLaren because of the perception that came with it.
But the journey to purchasing his dream car dates back to Michael’s childhood. Growing up, Michael learned the importance of frugality — a mindset his parents instilled in him from an early age. They taught him the basic foundations of investing, which kindled his entrepreneurial spirit.
It started with the cliche childhood business: a lemonade stand. But that wasn’t enough — he wanted to earn passive income instead of having to work for every dollar (which is what he charged for a cup of lemonade). From there, he migrated to vending machines. The earnings of his first vending machine allowed him to buy another, and then those vending machines led to another, and, soon enough, he had an arsenal of 25-cent candy dispensers.
With a $2,000-ish car that his grandfather left him and the savings from his vending business, Michael got his first loan to buy the car he wanted. Eventually, he sold it — and lost money due to depreciation and the loan interest. In most cases, cars are depreciating assets; one only hopes to get a portion of their money back.
When Michael realized this, he knew he needed to spend smarter or invest better (so he did both).
He sold his 2008 Chrysler 300 to buy a less expensive car that offered more potential profit — a 1998 Porsche Boxster with low miles. Next, he bought a 2005 Mustang (again, with low miles). He drove both vehicles for a year or two before selling them for more than he paid for.
Connecting the dots, he realized he could flip cars and gradually increase his buying power — and potential profits.
To date, Michael has flipped 15 cars, including a 2010 Bentley Continental GT — which he bought at a discount from an auction (it had hail damage) and then restored — and a 2014 Porsche Panamera — which he sold to a dealership for a four-figure profit.
And he’ll likely flip the McLaren down the road too.
Why would he sell his dream car? Because they aren’t just automotive vehicles — they’re investment vehicles.
Of course, he enjoys driving luxury sports cars (who wouldn’t), but he only keeps a car for a short time period, before flipping it to break even or make a profit. Since he treats these vehicles as investments, he’s patient and diligent when assessing his next purchase. He researched the McLaren for over six months before pulling the trigger.
One of his focuses is high-net-worth sellers who don’t care about losing money on a car sale, they just want more than they’d receive for a trade-in. So, he saves them time and provides a smooth, easy transaction.
The same diligent, workmanlike approach to flipping cars for a profit can be applied to any investment — whether it’s buying stocks, real estate, or vending machines.
Even starting a lemonade stand on the street corner.
If you want to hear more about Michael’s story, background, and thoughts on investing/life, check out his interview on the MVMNT Project Podcast.
Michael shares a lot of wisdom nuggets, but I’ll list a few of my favorites.
People struggle financially to create a persona — an illusion of grandeur. They worry more about appearing happy and successful than truly being happy and successful. I referenced a similar idea in an early newsletter: The silent killer of our finances.
Instant gratification will get you in trouble. Investing and wealth-building are long-term ventures. If you make emotional decisions and pursue get-rich-quick schemes, you’ll get burnt.
Everything involves risk. The key to maximizing your risk-reward return is to take calculated risks. Michael didn’t flip cars on a whim. He constantly scoured the car market for the ideal buy/sell situations. The work you put into before you invest in anything will ultimately determine your odds of success.
As a reminder, you can check out previous editions of the Bits newsletter here.