Flipping cars can be a nice sideline for you to have. There are the obvious benefits of making some extra income on the side. Plus, assuming you have an interest in cars then it’s an interesting and fun way to spend some spare time.
Before you get too excited at the prospect of making easy money doing something you love there are a few pitfalls to avoid. Be prepared to make some mistakes and even long time car flippers mess up now and again.
What you will read here is some tips to avoid making these mistakes and also to learn how to make extra money on your new enterprise.
Are There Any Legal Issues To Selling Cars You Should Worry About?
Depending on which country you live in or which state if you are in the USA then you will need to research your local regulations. There are different limits to how many cars you can sell in different states. If you get too good at this you breach your state’s limit and then need to register for a licence.
You can avoid this to a degree if you have friends or a partner who is willing to let you register cars in their names. Make sure you look up these important limits before you proceed with your new hobby.
Learning About The Used Car Market
You will need to know what cars can be flipped easily for profit. You will need an initial investment and you want to make a return on that quickly so some research is needed. If this sounds time intensive it will work out long term once you get a feel for the market.
You need to know what used cars are popular. The Department of Motor Vehicles ca give you used car statistics in your state. This will give you a better idea of your local market.
You also need to know how much you should be paying out for a vehicle. By studying the used vehicle market you should be able to get a good feel for how much certain makes and models are going for (according to year and mileage). Look at Craigslist or Blue Book for example. You should really be looking at vehicles between as low as $500 and up to maybe $4,000. These cars will be much easier to flip quickly. Remember you are not looking to get rich so don’t plan on buying up Ferraris.
How Much Should You Invest In Car Flipping?
You should probably just look at investing the money you are willing to risk at the beginning. Ie your own. Don’t go big by asking for a huge bank loan. Remember you can make mistakes buying and selling cars.
Look at putting in somewhere from $500 to $2,500 at the beginning. This minimises the risk on your first time. Remember the aim is to buy low and sell high.
How To Choose Your Cars
Stick to the price range of $500 to $4,500 so when you sell you can attract more cash buyers. Cash is simpler and faster than a potential buyer having to arrange financing. Stay away from speciality cars unless you are a seasoned pro and know what you are getting into. You could be stuck with an expensive vehicle for a long time. Lower priced common cars are quicker and easier to move on.
Use Craigslist as it tends to be easier to negotiate and government auctions. Try Google Alerts for instance notifications and also let your friends know what you are doing. Tell them if they spot something good to let you know and you’ll give them a commission. You could also consider advertising yourself, offering quick cash for purchasing a local car. Craigslist would again be a good place.
Making Sure The Purchase Is Ok
You may know cars inside and out but there is also the risk of buying a lemon. Use Lemon Checks and SaferCar to check the VIN and car history.
If you know about cars or have a friend who can come with you to check the car then great. If not then consider setting aside a little extra money to use a certified mechanic to check the car is a good purchase. This last step will slow down the process but it’s better than rushing in and losing all your investment. Of course this is why low purchases are better than throwing $7,000 in and losing more.
Improving The Vehicle And Maximising Your Sale
It goes without saying really that making the car look its best is going to increase interest and hopefully gain you a better price. If you used a mechanic at the buying stage then you should know what minor repairs need doing. If you can fix them yourself then all the better. If you are time poor then you could look for a private mechanic working out of their own home as this would be the cheapest option.
Clean the vehicle. The importance of this should not be overlooked. A nice, clean smelling car, washed and waxed is going to look great in the photos and in a viewing. Don’t pay a professional as it will cut hugely into your profits.
Minor repairs like changing windscreen wipers can help as the less problems the buyer sees the easier the sale will be. Consider getting membership subscriptions at dealers for discounts on basic parts and cleaning products.
Things like window tint may be off putting to some people. How to remove window tint? Remove yourself if you know how or search out a professional with an affordable price.
Advertising And Selling Your Car
First you need to set the sale price. Use Kelly Blue Book for reference and set the price a little higher to allow some negotiation room. Most buyers will try to bring the price down so it should help to add a little wiggle room in there.
Take high quality photographs after you give it a proper vacuum and clean. List the sale on Craigslist. Consider making a one page website with photos and info that you can easily update and include the link on the Craigslist page.
Try to encourage the buyer to come in person so they can see the car there. It should be easier to negotiate when that potential purchase is sitting there asking them to drive off in it. Never act desperate or try to hard sell. There will always be another buyer interested. Have all the paperwork, keys etc ready so if you make a sale then you can finish it nice and smooth.
Remember, check your local limits on car sales first. Do not invest more than you are willing to lose in case of a bad purchase. Check the car over including all electronics (sunroof etc). Check the VIN. Negotiate the best price for you. Clean the car fully and make minor repairs. Advertise with quality photos and full details. Make the sale!