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You have probably heard of flipping houses, but have you heard of flipping cars? If you have a good knowledge of cars and a few handy mechanical skills, upgrading and reselling used cars could be a lucrative side hustle. But there is more to car flipping than just buying and selling. From Craigslist to cheap wheels and tires, here are the nuts and bolts of car flipping.
1: Legal Considerations
Before you get excited about your first car flip, make sure you check out the regulations in your state. Selling a single car as a private owner is usually fine, but some states require you to register for a dealer license if you plan to sell multiple vehicles a year. You may be required to take a dealer licensing course, apply for a surety bond, or have a physical dealership location.
2: Where to Find the Right Car
Thanks to the Internet, there are plenty of places to find inexpensive cars with good flipping potential. Online platforms such as Craigslist, eBay Motors, and Facebook Marketplace are great places to start. Be thorough with your research and communicate any questions with the seller before bidding. Check their seller ratings to ensure that they are legitimate.
Public auctions or government auctions can often have good deals. These auctions offer everything from impounded vehicles to surplus government cars, usually priced at well below market value. If you have a dealer license, you can attend dealer-only auctions. These auctions are not open to the public and can boast better deals with much less bidders.
Simply walking around your neighborhood may also yield some hidden finds. Many people who do not want to deal with too many inquiries will post ads on local classifieds or community notice boards. Even a “for sale” sign in a parked car may be a good opportunity. What’s more, you get to check the vehicle in person and make sure that it is a smart buy.
3: What to Look For
Not every used car has had the same history. Mileage is one of the most important things that buyers will look at; low mileage generally means less wear and tear and fewer potential issues. That said, ask how long the car has been sitting, as a car that has low mileage due to not being driven for a long time could also need a lot of extra care.
A vehicle history record is important when buying a used car as it provides information from ownership to maintenance history. You can likewise get the VIN (vehicle identification number) from the seller and run a report on the vehicle on a platform such as AutoCheck. A detailed vehicle history will give potential buyers more confidence in their purchase.
Finally, the condition of the vehicle determines how much you need to invest to get it roadworthy. Look for signs of costly damage like dents or rust. Be sure to check the undercarriage and under the hood as well. Check if the engine is running and, if not, what the issues are. Inspect the interior for torn upholstery, damaged instruments, or bad odors that you will have to deal with.
4: Assessing Fair Market Value
The fair market value of a car is based on the current state of the open market and its activity. You should always research the going rates for your vehicle of choice before making a purchase. Websites such as Kelley Blue Book and Edmunds have appraisal tools that can offer accurate market valuations. Pick a vehicle that you can buy undervalued but sell at a high price.
5: Fixing Up the Car
The first thing to do once you have the car is to give it a thorough once-over. Make a list of all the issues that need to be addressed, and highlight the items that you can take care of yourself. Unless you have a fully functioning garage, more complicated repairs such as engine replacements, safety function servicing, and wheel alignments should be left to the professionals.
Estimate the cost of the repairs including any spare parts or tools you may have to acquire. Be sure to leave a buffer for any surprise expenses. Ask for quotes from different repair shops instead of just one. If you find that you have extra budget to spare, upgrades like new wheels and tires from discount auto warehouses can add value to the appeal of your vehicle.
6: Making the Sale
After a good few weeks of hard work, your car should be good as new and ready to go back on the market. Get a professional inspection done by a licensed mechanic to get your car a clean bill of health and cover your bases legally. Give the car a deep clean, inside and out. Make sure the glass is gleaming and that the paint job looks flawless and polished.
Now that your car looks like a million bucks, price it appropriately based on its condition and the fair market value. Take some quality photographs of the vehicle and create a compelling listing that lists all the desirable features of the car and any value-added extras. Ditch Craigslist and sell your car on higher-end sites like CarGurus that provide buyer financing.
For your initial flip, a sensible investment would be about $2000. As you become an deft hand at the game, you can scale up the investment and, in turn, the profit. It is important to have realistic expectations of how much money you can make. For all your effort and investment, you should aim for at least a 20% profit on each project. Good luck with your first flip!
