howdy all,

I would like to get a home based FFL. My HOA guidelines don't specifically say "no home businesses are allowed", nor do they state that they are acceptable either.

My intent is to buy guns and to resell them wherever legal, gunshows, my house, friends/family in the local gun club, etc. Basically anywhere legal.

How can I proceed and be fully compliant with the law? I have to have an 01 FFL, as far as I can tell. I am worried that my IOI will try to deny my license due to lack of a premises. Given my intent, is this avoidable?

You must have business premises, and the business must be legal and authorized at that location.  Your city/county zoning and your HOA will need to sign off on this, if you want to use your home as your premises.  You'll also need whatever other business permits/licenses are required by your state/county/city.  And, by law, you can only do business at your premises or at a "gun show".  The definition of "gun show" is fairly broad, but by no means unlimited--going to a buddy's house to complete a transaction would be prohibited, for example.

Before you jump into an FFL........write a business plan and read every thread in this FFL forum and the archives. You would be surprised how many guys think they will earn a profit selling new guns only to discover Bud's retail price is less than your wholesale cost.

Your home would be your licensed premises. The ATF IOI will read your HOA covenants to see if they allow home based businesses or walk up traffic.
A licensee may only conduct business from two locations: the licensed premises and a gun show/special event.  There are restrictions on what is considered a gun show/special event.

Not exactly. ATF will review the local restrictions, but there is no "sign off" anywhere on the Form 7.

"Sign off" was a poor choice of words, but my understanding had been that they wanted something in writing from the HOA (if applicable) and from the relevant zoning office stating that the proposed business would be allowed.  If this isn't the case, and they just review the relevant codes/covenants and come to their own conclusion, thanks for the correction.

danb35,

My IOI didn't exactly use the words you said, but that was very much the impression he left me with. Something in writing from my HOA before they would proceed.

I wasn't too worried about the business plan part. Honestly, I didn't want to even keep an inventory. I wanted to facilitate online transfers. I figure I could do pretty good for $5 transfers.

Well how are you going to sell at gun shows as you wrote above without having inventory?
See that part I bolded? That tells me you haven't spent thirty seconds worrying about a business plan. And you should.
Once you discover things like the value of your time, insurance for your customers firearms, office supplies, safes, an alarm system, etc. (none of which is required by law, but damn important).........you'll find that a $5 transfer fee was a poor business decision.

I charge $20 per transfer, $10 for CHL/LTC.......and the $10 is only workable because of the volume I do with those buyers. The last guy I know of who tried $6 transfers took about a year before he realized he was losing money on every transfer. He doesn't do $6 transfers any longer.

With an 01FFL costing $200 for your first three years you'll need to do forty transfers just to cover that. How much is your time worth? If the idea is to get an FFL to do 10-12 transfers a year for your shooting buddies you are making a poor decision. While ATF doesn't have a minimum, the license is for those that intend to engage in the business of dealing in firearms. The application clearly says its not for personal collecting.

Three or four years ago there was a forum member who moved to Marfa or Alpine and was convinced he could sell guns to the locals. It was a debacle.........he lost his shirt.  It was a perfect case study in why you should research the market and have a written business plan.

How many dealers are within a twenty minute drive of your premises?
What are their transfer fees?
How many people live within a twenty minute drive of your premises?
What is the median income?
Going to sell at gun shows?
What will make people buy from you rather than the other dealers at that show?
Typical cost of a table is $65-85.....how many guns can you sell in two days to cover your tables, gas, meals and hotel?
Do you have another job?
Who is going to sign for those gun deliveries at your home?

I'm lucky. I'm in Plano, and have more than a million people within a twenty minute driving radius of my home. Plano has the highest median income of any city in the country with a population over $250,000. I average 170 transfers a month, but it took a lot of work to get there. There are dozens of licensed dealers within ten miles, but not all do gun transfers. Most of the local gun stores charge significantly more than I do and one actually refers transfers to me.

I'm not writing this to scare you off, but to save you $$$$.

You brought some interesting points - thank you. End of the day, I figure i'll be in it for at least 1k to get set up. Shouldn't cost me more than 2k. I'm bored and have some extra cash and this seems like it might be interesting thing to do. It would be a second "job" for me so to speak. The goal here is just to help fund my own gun buying habit, so the amount of money I need to do that is relatively low.

Since you're in Texas, I've always thought Academy to have pretty decent prices. One particular gun in their stores goes for 389. I can find that same gun on the internet for 316, no CC fee shipped free to my house. Add ten bucks for me (double my transfer fee!) and that seems like a good deal for my customer. In theory, I could do that now, adding $20 for my local FFL's fee and have a good deal for my customer at 346..(I am fully aware doing this is illegal - I am just making a point about the economics). If I can get that same gun even cheaper from a distributor so much the better. In my view, all gun guys are cheap-asses. I include myself in this. What do we all want? Cheapest guns possible.

Regarding the gun show angle, my idea there was to acquire a small inventory of stuff right before the show - maybe 10-20 guns - using above method. I don't know what the other dealers might be charging, but if I can undercut them enough, I should be able to flip the guns. Heck if I can undercut their cost, even the dealers might buy from me. (seen it before but not at gun shows). If I only hit the local shows to flip some guns that saves me on miles/meals/hotels.

I am in the greater Houston area, so like you, there is a good population and some coin locally.

They do and are profitable because they buy guns by the thousands each month. Their wholesale cost will be far less than yours.



It's not what gun YOU can find, but what your CUSTOMERS find. If you order/buy the gun for that customer.......you are required to charge 8.25% Texas sales tax.
There is no Texas sales tax on a firearm transfer.






Huh? Since brokering is illegal why bring it up?
If that gun is available online and a another local dealer charges $20 for a transfer......why in hell would someone pay you $10? That doesn't make sense. I don't think you have the foggiest idea what "economics" has to do with a firearm transfer.

Is your plan to place the order for the customer?
Or to let him find what gun he wants and have it shipped to you?





"If"?
What makes you think you can order a single firearm cheaper than a dealer who orders 5,000 guns a month from that same distributor?
While there are MAP policies that protect small time dealers, the enforcement is often spotty or nonexistent.




This is why you need to take a deep breath and do some research. If your market is selling cheap guns and cheap transfers to the cheapest of the cheap......you'll fail.
Getting a good deal is not the same as cheap. You'll find Hi Points don't bring in the same clientele as Sigs.





Again, your lack of knowledge of the gun business will have you in serious debt in short order. Do you not think this method has been tried before? Do you not think every other dealer in that show is planning to do the exact same thing?  As far as "I don't know what the other dealers might be charging.." You damn well better know before you spend a single $. That's just stupid.

Try that theory with SAW, The Gun Zone or any of the other big gun show dealers. Their wholesale cost will be far less than yours. If you are buying 10-20 guns you aren't getting any discount from a distributor. Even $10-20,000 worth of guns a month won't get you to the same pricing tier.
Heck, I've seen SAW sell Glock magazines significantly below cost just to piss off another dealer.






Really? You can't be serious. You think by buying 10-20 guns for a show you will be able to beat distributor pricing that any licensed dealer can already get for himself?
Give me an example of the firearm and price that you will undercut AND STILL MAKE A PROFIT.
This is the most asinine thing you've written.





Wise decision, because I don't think you're going to be nearly as successful as you think.

First off, thank you for taking the time to pick apart my ideas and plans. Without some good, realistic criticism, how can I make them better? I can't. So thank you. :)

Regarding Academy, I agree with you that their wholesale cost will be less...and their profit margin will be greater. But that doesn't matter. I just need to have a selling price less than theirs to get their customers. Same story with SAW and The Gun Zone, right? I just need an actual sticker price less than theirs. Especially if they are bound by supplier agreements to MAP, and I am not.

I 100% agree with you on the aspect of good deal vs. cheap. I'd rather not sell a pile of Hi Points and then deal with the eTrace requests 6 months later. That doesn't sound like fun.

The goal of this is to flip guns, have some fun, and make a little cash. From what you're saying it sounds like it will be a hell of a fun learning experience.

 
Yes, it does matter. Academy is the only vendor you mentioned.....ever heard of Bud's, Palmetto, Sportsman's Supply, Kentucky Gun Co? There are hundreds of internet retailers that will undercut YOU in price. I've bought new, in box S&W M&P15'22's from Palmetto for $150 less than any distributor had them for.




How much $$$$$ are you prepared to risk? You mentioned buying 10-20 guns.......think buying 2-3000 guns and you'll be on par with them.
If you wrote out a business plan right now it would mirror going to the Dollar Tree and buying a bunch of stuff for a $1.......and then renting a table with each item priced at $0.97   How long before you realize that isn't a business?




For fucks sake man.........you might sell out but do some effing math. What is the point of selling for less than another vendor when you are losing $$$$ on every sale?
How many guns will it take before you realize that not only are you not earning a profit but you are hemorrhaging $$$$$?






Uh, what makes you think you aren't bound by MAP?
When you purchase any new firearm from a distributor you agree to be bound by the manufacturers MAP. If you violate MAP you risk the distributor never selling you another firearm again. Heck, Glock puts out a monthly list "Do Not Sell" list to distributors......ALL distributors. This means if you price your Gen 3 Glock 19's at less than $499, and you get reported.......Glock Inc puts you on that list and no distributor will sell to you.





NTC trace requests aren't difficult or much of a hassle. The hassle comes when a dealer has a significant number of trace requests. ATF sees abnormal numbers of trace requests as an invitation to do a compliance inspection as often as legally allowed.





I think you are going to find it an expensive learning experience. Good luck.

I have had my license for 10+ years.  I mostly do transfers for friends.  I will buy and sell guns but usually used stuff as that is where you find some deals.  If you make $20 on a transfer or $20 ordering, paying for, receiving and transfering a new gun, which makes more sense?

I actually refer people to online retailers like Buds as its cheaper than I can get it for, they have my license on file and I do not have to charge and collect sales tax.  Most of my personal guns I buy retail.  I have tried many angles to buy new stuff and sell at a profit but it is a razor thin margin.  I was in Dicks and they had a Rem 700 ADL-LR with a cheap scope for $399.  Try to find that cheaper wholesale.

Since I have some knowledgeable guys reading this....Can I include tax in the advertised price and still be compliant with MAP? I read Glock's MAP on Davidsons website and it didn't say I couldn't.

If I can advertise a Glock 499 tax included that seems like a good deal for my customers.  If wholesale price is 425 it seems like I could eat the approx 50 in sales tax and still come out ahead.

No. You also can't advertise "free box of ammo", "Buy 10 Glocks get one free", etc  Reread that MAP policy.



It would be, but that violates Glocks MAP. Texas law requires you to show what the sales tax is on any "tax included" sale.
.....The MAP Policy shall also apply to any end-price, end-of-transaction sales price, as well as any “in
cart” price and/or any “check-out page” of any Distributor/Dealer’s website or related internet site. In
addition, should any Distributor/Dealer advertise GLOCK products at a price which results in net prices
(final price after deducting discounts, free delivery, and other benefits offered to the buyer) below that
which is set forth and allowed hereby, Distributor/Dealer will be in violation of the MAP Policy......


Being that $425 isn't the wholesale cost of a Glock you might want to continue your research.

It seems like I could buy 5 of these...maybe just get all 9 and take them to a gun show for 475 or 499 tax included.

why wouldn't that work?

link

It would. Purple labels are not under MAP.

But, again, WTF would someone pay YOU $499 for a gun they can get THEMSELVES for $435?

Because they can't get them for 435 themselves since I just bought that dealer out. See where I am going?

Now all I have to do is get a table next to a vendor at the local gun show and put up a sign selling for 475 tax included. I think I would sell them all that way don't you?

let's say I didn't buy them all, but a customer can't buy them right now at the gun show for 435. There is shipping plus FFL transfer and waiting around. For the customer, I have them brand new, right now, for 25 bucks less than the guy next to me.

Do you really think that's the only dealer to have them?



Knock yourself out.



What if someone else bought his straight from Glock for $375?

For fucks sake.........do you really think you are the first guy to come up with this idea?

No, you're right - I don't think they're the only dealer to have them. There are probably others if I can find them. But honestly, if I can get them for 375 then I should be buying those (assuming they're in a sell-able caliber i.e. NOT 45 GAP) to re-sell. Do you have a link or a phone number or something to that price? Considering that's below blue label, I've been wanting a G26 pretty badly for myself.

I also can guarantee you I'm not the first swingin' dick to think of this. I'm sure this has been tried and failed many times before. Also, there probably have been some successes - not everyone can fail otherwise we would not have kitchen table FFL's in the first place.

I've got some factors working in my favor though:
1. I have a good day job. I'm doing this for shits and giggles and a little extra fun money.
2. I want to learn all about how all this works. You and I can sit here and bullshit about it all day (and you're bringing some good points that I AM listening to) but Trial by Fire is best.
3. I potentially have very low overhead as long as I am conscious about where and what I am spending on.
4. Since I have a day job - I don't need the profit margin others need.
5. I would like to have the LLC and Resale certificate, biz bank accounts and all the tax experience that goes along with this. I am an accountant/auditor for my day job and it would be nice to know how to do some of the small biz stuff. See #2 trial by fire.
6. I have the cash to burn. This means I don't have to have debt/credit. Interest payments on lent money will crush you. Like you said, I know I'm not the first one to think of this. I bet a smaller number of those failures had enough cash to fund themselves entirely.
7. To the extent I carry any inventory, it has to be small and for a short period of time. This means getting a low acquisition price (like we were discussing above) on in-demand stuff, and offering it for a low price to flip it quick. I am an HK guy at heart - and this strategy would not work with most of their stuff. VP9 I think it would if I could have gotten on the PSA deal for 450 that was on this site awhile back. I could probably make it work with the P30SK as well, since carry stuff is popular. This definitely wouldn't work with a VP40. On the Glock side...this would probably work with 17/19/26/42/43. It's probably harder to flip a G26 right now considering the G42/43
8. At the end of the day I just have to have a price lower than the guy sitting next to me. Having a lower overhead, and willingness to accept lower profit margins are crucial to this. But if I am just in this for fun/hobby/learning (more importantly I am not trying to feed myself doing this) then it seems entirely possible that it could work and I could make a few bucks at it.

Here is more of my perspective on this; I can go out and buy stocks that pay 4% dividend pretty easily. 4% on a 375 Glock is 15 bucks. Add another 20 bucks for contingency and I'm still only at 410. Add SUT on that and We're looking at 443. I get a table next to a big vendor at a funshow, put up a sign "New G17, 450 Drive-Out", while the guy next to me is tied by MAP and has to price them 499 + tax....you tell me where the customers are going. I don't know if I could flip 10 guns for that, but I bet I could flip 4-5.

LOL...good luck!  You won't be an FFL very long.