Pawn Shops. Are they +EV?

fatass748 · #1 12-07-2006, 01:17 AM

I have been considering opening a pawn shop/pay day loan service for quite some time. It seems to me that this is purely a profit based business. Anyone have an input? Am I being overly optimistic of this type of business?

spex x · #2 12-07-2006, 01:34 AM

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I have been considering opening a pawn shop/pay day loan service for quite some time. It seems to me that this is purely a profit based business. Anyone have an input? Am I being overly optimistic of this type of business?

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I don't have any direct experience, but I know two guys that each have multiple pawn shops. One guy makes a decent living off his 3 locations, but hates the work and the people, and wants to get out of the business. The other guy has 5 locations, is a millionaire because of those locations, and has managers run all the stores. IMO, a pawn shop is the kind of business that I would consider if the right opportunity came along.

limon · #3 12-07-2006, 01:40 AM

are you very hairy? do you cap w/ draws on the flop and turn? do you enjoy a hookah while playing backgammon? can you turn raw hamburger into a delicacy? do you have fake loius vitton bags in the trunk of your 1998 mercedes? if so a pawn shop is ++++++++++++++++++++ev.

fatass748 · #4 12-07-2006, 02:10 AM

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are you very hairy? do you cap w/ draws on the flop and turn? do you enjoy a hookah while playing backgammon? can you turn raw hamburger into a delicacy? do you have fake loius vitton bags in the trunk of your 1998 mercedes? if so a pawn shop is ++++++++++++++++++++ev.

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I meet 3 out of the 5 of your requirements so I guess I'm good to go. I was actually hoping to hear criticisms towards owning a pawn shop in general. There must be downsides(aside from making money off of desperate people.)

Freakin · #5 12-07-2006, 02:54 AM

Buying stolen goods without knowing it is an obvious downside. And getting robbed. In general it just seems like depressing, but profitable work. Everyone i hear of that own multiple pawn shops is rich.

WarBus · #6 12-07-2006, 02:56 AM

You need to check what is required in your local jurisdiction.

There is usually an application and various licenses and permits you must obtain if approved. There is also a bond requirement of 50k or more for most states.

Add the cost of location, fixtures, security, utilities, initial inventory and cash for loans and opening a pawn shop requires a lot of capital to get started.

spex x · #7 12-07-2006, 03:24 AM

[ QUOTE ]
You need to check what is required in your local jurisdiction.

There is usually an application and various licenses and permits you must obtain if approved. There is also a bond requirement of 50k or more for most states.

Add the cost of location, fixtures, security, utilities, initial inventory and cash for loans and opening a pawn shop requires a lot of capital to get started.

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Yeah, you might need different licenses for each part of the business as well. Like the pawn shop is one, the payday loan is one, title loan is one, etc. Thats gonna be some serious red tape.

Thremp · #8 12-07-2006, 02:23 PM

In a lot of locales you are not responsible for buying hot goods.

You see a homeless dude come in with 10 big screen TVs. Don't ask, don't tell in a lot of places.

Colt McCoy · #9 12-07-2006, 03:05 PM

Instead of a pawn shop, what about those payday loan places?

spex x · #10 12-07-2006, 03:09 PM

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Instead of a pawn shop, what about those payday loan places?

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yeah, payday loan is a better deal IMO. Title loan is good too, but Payday loan would be the best.