“Flipping” has become a hot topic in the past few years. Maybe the interest is rooted in the desire to be an entrepreneur without having to run one particular business or to make some extra cash on one’s own time. Or, perhaps there is a sort of excitement that comes from making extra cash quickly and creatively. Whatever the reason, “flipping” is now both a business and a hobby.
Fixer upper homes are the targets for many flippers, there’s a more accessible option: cars.
So, let’s break down how to flip cars for those who have never considered the process before.
A Few Warnings for New Flippers
Try to stay away from dealers who report back to big name dealerships. Not only will the paperwork and negotiating tire you out, but hidden fees may eat away at your budget and you could flop before you even start.
Also, consider that some states have special regulations that dictate how many car titles can be under one person’s name at a time. Do you already own two vehicles? Great! But, realize that the cars you purchase for flipping are under your ownership, too, even if you plan to sell them fairly quickly. So, check your state’s regulations before you start.
And sometimes, even with the best effort, some purchases are trickier than others. A surprise mechanical issue or lack of interested buyers can be disheartening. You may only break even at times. But, we will break down how to make car flipping simple and uncomplicated.
What do you need to get started?
First, think of your budget. Everyone has a price point they are most comfortable with, and as a first-time flipper, try to stick to yours as best you can. Most cars with a good foundation to work with starting from anywhere between $500-$4000 (excluding higher value muscle cars, antique cars, etc.). Decide how much you can put aside, totaling the cost of the car and the amount you are willing to pay for upgrades.
As you begin research, become familiar with Kelly Blue Book, NADA, and Edmunds. Each website offers a comprehensive look into car pricing.
Choosing the Right Car
Without knowing it, you may have a predisposition to certain brands and models. Did you grow up with family who had an unspoken loyalty to Ford trucks? Maybe you spent summer nights off-roading and sleeping in the back of Jeeps. Either way, you probably have more experience than you think.
Some of the best knowledge for a new car flipper comes from their first car. Did you have a 2001 Chrysler and notice that the power steering locked up at around 150,000 miles and when you took it into the mechanic, there were a few other surprise maintenance issues? Now you can assume to look out for models of that year and mileage, because many car owners would rather sell cheap and upgrade, rather than put money into an older make.
For a quick flip, avoid exotic, foreign, and rare cars that probably need specialty mechanics and parts. If you are willing to spend quite a bit more time to restore an older classic or rare sports car, then go for it! But otherwise, sometimes simpler is better.
Both AutoTrader and KBB put together their own lists of the best used cars to purchase for less than $5,000 - so those lists might give you a starting point! Be sure to take into account the price of parts for different types of cars and the level of maintenance that they need, of course. For example, Japanese cars often have inexpensive parts. Cars that are extremely popular and common sometimes have inexpensive parts, too, even if only because secondhand parts tend to be very accessible.
Finding the Right Car
Now, consider the best platform for buying and selling. There are ample places to look for a car. Since the goal is to buy a low-cost car, you want to try to find people that are motivated to sell. A few such places include:
- Facebook Buy/Sell/Trade Groups
- Police and city auctions
- Classified ads in your local paper
- Estate sales
- eBay Motors
- Local Dealers that have unwanted used inventory
You may even land a nice fixer-upper parked near a highway or in a busy parking lot with a ‘For Sale’ sign.
If I could give you just one tip, it would be this: don’t rush into buying a car for too much money just because you’re eager to get started. If you give yourself some time to look around, you’ll be more apt to find a good deal.
Put Yourself Out There
Invite car deals come to YOU! You can post on your social profile, in buy/sell/trade groups and even on Craigslist. That will also help you to build some word-of-mouth publicity, too. Although sellers may not be browsing a classified site for a place to sell their car - they could still see it, or it may connect you with someone who knows someone. Grab the attention of users by making a post similar to the one below:
Title: DON’T TRADE IN YOUR CAR! SELL FOR CASH TO ME!
Description: Dealing with car salesmen and dealerships are exhausting and you will get trade-in value, which is oftentimes way lower than what the car is worth. Let me make an offer for your car and I will pick it up and pay in cash. I am looking for cars under (INSERT YOUR PRICE POINT HERE) and under (INSERT IDEAL MILEAGE HERE). If interested, message me with the make, model, and mileage of your car—and if picture if available—and I will make an immediate offer.
It is helpful to reply to emails as quickly as you can, and including the Kelly Blue Book pricing for the car in comparison to what you are willing to offer is a great way to show possible sellers that you truly are giving them a good deal. If the KBB price is 800 and you offer 950, the side by side will encourage the owner to sell.
Inspecting and Purchasing the Vehicle
Here are a few elements to keep in mind when evaluating the car before purchase:
Check the VIN and make sure the owner is who they say they are and the car is not stolen.
Take the car for a 10-15 minute test drive. Feel for stalls, issues with steering, etc. If you notice quick fixes, then you need not worry. But be mindful of engine’s sound, check transmission fluid, and any extreme cosmetic issues.
Consider meeting at a mechanic to get a onceover. (Places like FirestoneCompleteAutoCare.com have stores all over the US and can look under the hood, if you’d like an expert opinion.)
Once you’ve paid and the title is in your name, you are ready to go!
Sometimes, all that is need is a good wash and a little love in the interior. Check out National Detail Pros for a good detailing service! Sometimes, you may need to replace the brakes. Fixes can range from something as simple as oil to an issue in the engine. Be aware of what you are capable of doing vs. what you need to hire someone for and make sure you have room in your margins to absorb these costs. Don’t attempt repairs that you aren’t qualified to make, or you could actually wind up hurting the value of the car more than you help it.
We recommend looking for a trusted friend or low-cost mechanic who you can develop a long-term relationship with. Craigslist even has a space for retired mechanics looking for extra cash in exchange for basic reliability checks. Networking can be key to profits!
Posting on Craigslist is a tried and true method, as I mentioned earlier. After publishing a listing, it is possible to get an offer within minutes. You can also post on Buy/Sell/Trade sites.
Pro tip: use Trusted.Sale to verify buyers and handle the transaction so that you don’t have to worry about counterfeit cash or personal checks bouncing. You can place a link in any post that you create about your car. Trusted.Sale also helps with the paperwork and allows qualified buyers to receive financing – which helps entice more prospects, since they would otherwise need to purchase through a dealership with a higher markup.
Follow the basic listing process:
Clean the car up. Exterior and interior clean up.
Take pictures you would actually want to see. No dark garages. No blurry and grainy quality images. Take the car in an open lot, in the sunlight, and photograph several angles.
Research and compare the price to others listed.
Have all materials ready! Compiled together should be the vehicle history report, keys, title, and bill of sale. (This part can be overwhelming but as I mentioned, Trusted.Sale can help with all of this.)
Determine what your absolute lowest price is, and never make a sale if you are uncomfortable. Stick to your price range and know that your first offer might not be your final one.
Now, it’s your turn to start car flipping!