Everyone has that family member or friend that just gets cars. They can identify the make or model from a mile away, and they know the names for parts most of us don’t know about. Does that sound like you? If so, then you could possibly make money flipping cars instead of just admiring them from afar!
Flipping cars is just like flipping houses. Buy the places that no one else wants, turn them into beautiful living spaces, and sell them for a profit. Cars are no different. Old parts can be replaced and new paint can be slabbed on to make a car look – and sell – like new.
There are, of course, plenty of drawbacks and not to mention a bunch of risks when you endeavor to make money flipping cars. If you’re thinking about buying up used cars and flipping them full-time, then this guide will clue you in on everything you need to know to get started.
How To Make Money Flipping Cars
The thing about flipping cars for profit is that you need to start out with a wad of cash. And a legitimate Dealer’s License. Most states will charge you for a misdemeanor if you try to sell cars without one. But I also know a number of guys who sell under the radar. So first and foremost, check your local and state regulations so you don’t run into trouble.
Also, if you don’t have extra funds and need to dig into your savings, then you’ll have a hard time getting started. You don’t want to risk your safety net in case your first flip doesn’t turn out so great. It is wise to save up at least $1,500-4,000 or more for your first flip.
If you can buy a car around that price, then your margin will realistically be between $1,000-$2,000. That’s a good chunk of money. If you could do just 1-3x sales a month that would be a fairly nice income from just flipping cars. That kind of profit is why so many people are interested in flipping cars. With the exception of houses, cars are the most profitable items to flip. You could, of course, start smaller with hobbies like flipping electronics or other money-making flexible side hustles to save up first.
Otherwise, if you’re ready to get involved in the flipping cars community, then your first order of business is to find the right car to flip.
Buying The Car
There are several things you should consider when buying a used car to later flip.
- Finding the right seller/car
- Making the purchase
Finding The Right Seller/Car
There are several places to check for used cars. Craigslist is an obvious first choice, but there are a lot of scams on this platform. Nevertheless, if you’re able to do your due diligence and sort out the real vs fake offers, then you could find a fantastic offer from a seller. Facebook Marketplace is another place to search for used cars online.
Those two platforms are where you’ll most likely find your first deal. You could also find offers at auctions, in the classified ads, or from word-to-mouth. Most of the time, though, people are searching (and listing) their cars for sale online. So start your hunt there.
Negotiating A Good Price
Negotiating is a part of the flipping cars for-profit business, whether you enjoy it or not (or if you’re skilled at it or not). Skill comes with experience, though, so don’t fret too much. As long as you can sniff out false offers and know what you’re looking for then it’ll be ok. You’ll need some side cash to start flipping cars because you’ll most likely seal the deal better with a cash offer.
The cars in the $1,500-$4,000 range will be the easiest to flip. Make your offer via text first before arranging a meeting. No need to drive all over town just to have your offer turned down straight away. Once you are able to see the car in person, you should know what to inspect it for.
Inspecting The Car
To buy and resell a car for profit, make sure the car has a clean title. Small repairs and damages, like torn seats or stains, can be fixed. That is the purpose of flipping a car, after all. Plus, at a low cost, you can expect there to be some much-needed repairs. But it’s wise to walk away from any vehicle that doesn’t have a clean title or history (run a Carfax just in case).
Also, don’t buy a used car with engine or shifting problems. Those issues can be never-ending and not to mention bank-breaking. If it’s your first time flipping cars, avoid the optimistic thinking that it will be an easy flip. You should know, as a minimum, how much repairs will cost when you see the car so you can calculate how much this is going to cost you on top of the initial purchase.
Purchasing The Car
A majority of the scams happen at this stage of the flipping process. With a slight hand on the paperwork, sellers can sleaze their way around showing you what you need to see. Like their real ID. Make sure it matches with the title on the car. If not, that could mean trouble down the line. On top of the title, you need a bill of sale signed by both you and the seller.
That way, you can drive without a license plate until you are able to get to the DMV and register it under your name within your state. In some cases, you may need a notary to sign off on the legality of the process as well, for example, if you’re buying across borders (Mexico – US). Handing over the cash is the absolutely last step of buying the car. Don’t hand them the money before unless you have every manual, documentation, and information you need. Oh, and the keys!
Repairing & Fixing The Car
After you’ve driven your new purchase home, now it’s time to fix it up. Repair any nuts, bolts, and lightbulbs that aren’t right. Sometimes that might mean ripping out all the seats to replace them. Or replacing an acid-corroded battery. If you know how to DIY that, then great! If not, YouTube will be your best friend for quick tutorials.
Fix it up, then clean it up. To resell a car, you need to completely clean the outside and inside until it’s squeaky and shiny. People are much more inclined to buy a used car that’s clean than one that could visibly use a little extra TLC. Think of it this way: if you could spend 2 hours doing a deep cleanse of the carpet but get to charge $150-200 bucks more because it looks so good, would it be worth it? I think so.
Once it’s ready, take quality pictures. Online shoppers make buying decisions within seconds and it’s often by how the product looks in the photo. If you have a crappy phone, borrow a friend’s iPhone or legit camera. The better the image, the more potential customers you will attract. What’s more, don’t edit the photos or falsify the image. Show the damages that still exist or the stains that were too tough to get out. They’re going to see it anyway so you might as well be honest.
Selling The Car For Profit
Once you’ve double-checked the appropriate sale price then the car is ready to be listed online. Most likely this will be on the same platforms you used to find used cars – Craigslist or Facebook Marketplace.
List all the details you need to draw buyers in. Remember, people like more details rather than less. Why? Because they are about to spend their hard-earned money – surprises aren’t usually welcome when it involves money. It’s completely realistic to list and sell within a day. If your offer is good and the car is in high demand, you could sell even in a few hours. Indicate how you wish to be contacted – i.e. by text-only or by email – so you aren’t harassed with unsolicited calls.
When negotiating, try to negotiate in person so the person is influenced by impulse and emotion. Step into the buyer’s shoes and think that way, because hey – you were in their position just before.
As a seller, make sure the process is streamlined and easy for the buyer. Offer to take care of everything (in reason), and be genuinely nice. Who knows? That person could potentially be repeat business for you or save your info for a later deal for a friend or family member.
Once you sign off on all documents, accept the cash, and celebrate your first successful flip!
Can You Make Money Flipping Cars Full-Time?
If you want to make money flipping cars full-time then you absolutely can. Again, check your local and state regulations on the resale of cars. But otherwise, if you are a talented salesman, have a natural ability with people, and know your automobiles like the back of your hand – then yes, you can make decent money flipping cars full-time. Just make sure you have the initial capital to invest before you go spending money you can’t make back.
Flipping cars for profit is a risky business, but with experience and patience, you will learn what to do and what strategies to avoid. If, after your first sale, you realize flipping cars isn’t your forte, then know that there are other ways to make money selling cars.