Have you heard about flipping things in order to make some big money?
Usually, the first thing that will come to mind is flipping houses, but another great idea instead is to flip cars.
You can make a lot of money from doing this, although you will need to know what you are doing.
As well as knowing how to choose cars and fix them up, you will also need to know the legal aspects of car flipping.
If you are looking for a way to make money that is fun and a bit different from the norm, car flipping could be for you! Let’s find out, is selling cars worth it?
Let’s find out all about how to flip cars legally.
What You Need To Know About How To Flip Cars
Firstly, we are going to need to look at what you need to know about how to flip cars.
It’s obviously not as easy as it sounds, as you will want to make good money from it, and so do it properly.
What does it mean to flip cars?
So, what does it mean to flip cars? Flipping cars as a hobby is where you buy a car at a low price, fix it up, and then sell it for a higher price.
Why would you want to flip cars?
There are lots of different reasons why you’d want to flip cars, with the most obvious one being to make money.
When you are flipping items, it means that you can buy them cheaply and then sell on for more. The potential profit margins are high.
The benefit of this is that there isn’t a big initial outlay, so you don’t have to have a load of money to start out with.
Another part of why you would want to flip cars is if you enjoy fixing cars and doing something hands-on.
Where can I find cars to flip?
The all-important question – where to find cars to flip? Well, if it were easy then everyone would be doing it!
There are a lot of places that sell cars, but the key here is to find cars that are selling low, which you can fix up and sell for a much higher price.
Typically, car dealerships aren’t the place that you are going to find a bargain car, as they have such high profit margins.
Instead, try and find some private sellers who are looking to get rid of their car quickly. And where would private sellers list their car?
A good place to start is with Craigslist. It’s such a popular site, and as it’s free, lots of people use it. That does mean that there could be a lot of competition on there though!
You could always ask family and friends if they know anyone who wants to sell their car, as that’s a quick way of getting in before it goes up for sale.
Other sites that a lot of people use to list their cars are Facebook and eBay. The good thing about going through a site like eBay is that you will have a certain amount of buyer protection when going through them.
How To Flip Cars – 10 Steps To Success
When it comes to flipping cars, there are some steps that you can follow to ensure that you give yourself the best chance of success.
Let’s take a look:
1. Check Your Local Laws & Regulations
This step is incredibly important – please don’t skip this one! The last thing that we want to do is recommend something without talking about the legal side of things.
Selling Limits For Non-Dealers vs. Dealers
Something that is very important to factor into all of this, is that in some US states there are laws on how many cars you are allowed to own within a year.
And yes, flipping the cars still counts as owning them!
If your plan is to quickly flip the car and maybe drive it from out of state, be sure to check with your insurance provider regarding your liability coverage for transporting a new vehicle.
2. Set A Budget For Your Efforts & Each Flip Candidate
You already know that we are big fans of budgeting here on The Savvy Couple!
You will need to make sure that you have a budget for this side business idea.
Start-Up Costs To Consider
Pretty much all new businesses will have start-up costs. What do you need in order to start flipping cars?
It goes without saying that you will need to have some money to start with to buy the first car.
You’ll likely want to buy a used car in really good condition, so research and the cost of the car are both a part of your budget.
The amount of money that you allocate for this will depend largely on how much money you have and want to put into this.
Something to think about is how many you want to do at once. When you are just starting, it may be best to do one at a time so it doesn’t get out of control.
Hidden Flipping Costs To Consider
Whenever you are starting on a new venture, it’s really important to prepare for any hidden costs.
The main one could be making sure that any repairs needed aren’t more extensive than you originally thought. It may be worth taking a mechanic with you if possible.
Buying Flip Cars With Cash vs. Financing
Another thing that you may be considering is if you should buy the cars in cash or with financing.
As the plan is to make money from this venture, the best thing to do mathematically would be to buy in cash as then you are not paying any interest on it.
Something else to note about paying in cash is that you are likely to be able to get it for less than the asking price as it is more appealing to the seller.
3. Check Fair Market Values
An important step is to make sure that you check the fair market values of the car that you want to buy to flip.
The Fair Market Value is the price that it would sell for under normal market conditions.
There are a few ways in which you can determine this, but it won’t be an exact science.
The types of things that you should take into consideration are:
- If it has been bought recently, the price that it sold for (or just the price the last time it sold)
- How much similar cars are selling for/have sold for
- How much it would cost to replace the car
- How much an expert thinks it is worth
It’s also worth considering where you are buying from, and where you will be selling to. The difference in cost between a private seller/buyer and a dealer can be huge.
There are also some companies which will do this for you, such as:
- National Automobile Dealers Association
- Kelley Blue Book
- KBB app
4. Start Shopping
Now the fun – but difficult part – starting shopping for your car!
It can be easy to get carried away in excitement with the new purchase, so remember that you are doing this to make money.
If this is the first flip that you are doing, you will probably want to flip it quickly. This means that you may want to avoid specialty cars that are more of a niche market.
That being said, specialty cars can potentially earn you more money because of that niche space.
Something to bear in mind is that you may want to target buyers who will be paying cash – and this generally means that they will be buying at a lower price point.
There are some places that are good to check out to potentially find a good deal:
- Public auctions (you can also try flipping cars from police auctions)
- Local newspapers
Inspect The Car Carefully Before Buying (Here’s How)
Before you buy the car, you need to make sure that you have inspected it thoroughly. The last thing that you want to happen is to find a bunch of expensive faults after you have bought it.
It’s incredibly important to make sure that you check over the car really well before handing over your money. It’s nice to take the seller at their word, but unfortunately, people do lie in order to sell their car.
With that being said, make sure that you check both the interior and exterior of the car. We don’t want any nasty hidden surprises!
It’s unlikely that you will be able to check every single thing in the car, but you can do a pretty good check nevertheless.
Try and get inside the car so that you can see everything clearly. Not only that, but it will be easier to detect if there are any unwanted smells in there.
Be sure to check over everything as thoroughly as a potential buyer (when you are selling it!) will. Check the flooring, upholstery, if anything has any permanent damage to it, and so on.
Also, make sure that you check that everything is working. The A/C, the indicators, and everything like that.
Check the exterior for serious damage that won’t come off, such as scratches or dents.
You can still buy it even with these things on if you want and may be able to get it for cheaper. Just bear this in mind if you want to sell it with or without the damage.
Under the Hood
This may make you a bit nervous if you aren’t used to doing it, but there are some basic things that you should be able to check.
Some examples of things to check:
- The engine oil
- The belts (this is very important as can be very expensive to replace)
- Radiator and radiator hose
Something else to ask is when the car was last driven because if it has been sitting for a while it may not run properly.
Buying From A Dealership
At car dealerships, they will be factoring in a profit margin to their price, so it’s not generally the best place to find a good deal.
That being said, it may be worth having a look and seeing if they are able to do you a deal on anything that they want to get rid of quickly.
Buying From A Private Seller
When you buy from a private seller, you should have more time to inspect the car, which is beneficial for finding any faults.
Let the seller know beforehand that you will be doing a thorough inspection so that they are not caught off guard.
You can also negotiate a good deal with a private seller if you present a good case.
5. Negotiate Your Price
If you are at auction, you will just need to bid the amount that you want to pay for it. It’s important to not get into a bidding war and get into a higher price bracket than you wanted.
If you are buying through a private seller, see how much they are willing to drop the costs by – and be polite.
Consider Needed Repairs + Cleaning Costs
Something to consider when thinking about the price you want to pay is any costs that you will incur after you have bought the car.
You should have checked over the car, which means that you know if there is anything that needs fixing, and you could also ask the seller if they know of anything wrong with it.
Regardless of how clean or not it is, make sure that you factor in cleaning costs.
Consider Marketing Costs
Ideally, you’ll want to post the car that you’re selling on sites that are free, but paid advertisements can mean more eyeballs on your listing.
6. Perform Any Repairs
Unless you are a trained mechanic, you will want to pass this job onto one. The amount of money that it will cost to repair the car will vary from different auto shops.
There are some things that may need to be repaired but won’t change whether or not the car would sell, so it may be worth skipping those – weight it all up.
You may be able to buy some parts cheaply online for the mechanic, and even look into second-hand parts if they are good.
Make sure that you compare the price of the repairs to how much value it will add at a sale.
7. List The Car For Sale
Once you’ve got the car fixed ready, it’s time to list it for sale!
Take a look back at how much you think the car will sell for, by looking at the fair market value.
You will also want to consider the lowest amount that you are willing to take for the car. You will probably get people trying to negotiate with you too, and don’t want to lose out on too much profit.
Look at where other similar cars have been listed and selling in your local area, as this will give you a good idea of where to list it.
Think about the type of person that is likely to buy your car, and where they would look for or see an advertisement.
That doesn’t mean that you should only list in one place, however, as it would be preferable to have lots of advertisements because then there’s a greater chance that your buyer will see it.
Craigslist is a good one to start with because it’s free and very popular.
8. Strike A Deal
Hopefully, you will be getting a lot of interest in the car that you are selling, and be prepared for these people to negotiate with you.
When you are pricing your car, try and allow some wriggle room for people to negotiate you down.
You will also want to consider if you want to accept payment via cash or bank check.
You also want to make sure that they are genuine buyers and are serious about being a potential buyer. When you are arranging to meet up, make sure that you meet in a safe place.
Consider ROI vs. Time On Market
One thing to consider is how long you are trying to sell the car for and what you want to get out of it.
You may want to reduce the price if you have an interested buyer and it’s been on the market for a while.
9. Reinvest Your Profits For The Next Car
As tempting as it will be to go and spend the money that you’ve made straight away, keep in mind that you are doing this to make money. And keep it!
The best way to build your business and money up is to reinvest the profits that you make.
By reinvesting your profit into the next car you can go for a more expensive car if needed, and ensure the continuation of your car flipping.
How To Flip Cars – FAQ
We’ve covered a lot, but there may still be some questions that you have. Let’s take a look at the most common questions to help you get started:
What are the best cars to flip?
When flipping, you will most likely want to look at which cars will flip quickly, and which cars you will be able to flip for a good profit margin. Ideally, you want both of course!
The best cars to flip for profit are usually well-known brands such as Ford or Honda because buyers know and trust them.
Another good sign is if a car has low mileage. Look at sedans, SUVs, wagons, etc.
If you want to try flipping luxury cars, this is a good idea if you live in a more affluent area where people are more likely to purchase these.
Is flipping cars legal?
Yes, flipping cars for a living is legal. There are some legal things that you will have to comply with though, such as how in some states you are only allowed to own a certain number of cars per year.
How much money can you make flipping cars? Can I really start flipping cars for a living?
The amount of money that you can make from flipping cars will vary depending on a host of different factors.
Do I need a car-flipping business plan?
When you are planning on making money, it’s always a good idea to have a business plan.
In fact, it’s the first thing I recommend doing whenever someone presents a money-making idea.
Even if you are planning on doing this casually and on a small scale, you still want to make money from it. That means that you need to have a proper plan for it.
Can I flip cars without a dealer’s license?
How to flip cars without a dealer’s license? Make sure that you get a dealer’s license and approach this in the right way legally.
If you are selling a lot of cars then you will be required in all states to obtain a dealer’s license.
Please note that there is a lot of paperwork involved and is not for the fainthearted.
It can be expensive – as well as legal fees, you will have to pay for things such as surety bond fees and more.
All states have different requirements, so before getting started check out what you need to do with your local state motor vehicle registry.
What do I need to know about taxes and such when I start flipping cars?
Make sure that you do your research on taxes as they will vary from state to state.
If you are getting lower-priced cars then this can help with keeping your sales tax down.
Bonus: Other Ways To Earn Cash Fast
Here are some other great ways to start bringing in some decent cash, with a short start-up time and little to no start-up investment required!
- Flea Market Flipping – if you are into the idea of flipping now, take a look at the other things that you can flip. You can flip so many things – kids pushchairs, electrical items, and so on.
- Take Online Surveys – Taking online surveys is where you will be answering questions for market research purposes. You won’t be making a ton of money doing this but it’s an easy thing to do when you have a bit of spare time!
- Boost Your PayPal Balance – If you want to give your PayPal a bit of a boost, check out these ideas we put together for making some extra cash.
- Online Proofreading – Do you have an eagle eye for spotting mistakes within the text? Proofreading could be the job for you! You will typically be checking over content to see if there are any obvious errors.
- Become A Freelance Writer – Freelance writing involves writing content for businesses such as blogs. If you enjoy writing and have a particular subject that you enjoy, freelance writing is a good way to make money.
- Find An Online Typing Job – A good way to make money online is by typing. There are lots of businesses that need help with this.
- Become An Online English Tutor – Do you have experience with teaching? Being an online English tutor is one of our favorite ways to recommend making money.
(You can find even more ideas for online jobs to earn fast cash, here.)
Final Thoughts On How To Flip Cars
Flipping cars isn’t necessarily something that anyone should try out, but it is a good option to make money if cars interest you.
You will need to make sure that you do the research and prepare properly, as there can be hidden costs along the way.