How to Flip Cars
If you are able to learn to successfully flip cars it can be a great side hustle. Flipping cars can be difficult, however. Luckily for you, I am an expert on the subject and have some great advice for newcomers to the car flipping crowd.
In some states, it is illegal to do so without a dealer’s license. You will want to check your state’s specific laws. In Colorado, for instance, you are able to flip three cars each year for profit without having to have a dealer’s license. Some states allow you flip as many as 15 cars throughout the year for profit without having a license. To make extra cash legally flipping cars you have a few options:
- Get a dealer’s license (these can cost up to $900 in some states). However, if you are looking to make a living buying and selling vehicles, a dealer’s license will be necessary to keep things legal.
- “Flip” the car. Car flipping, as described above, is illegal in most states (but not all). You buy the vehicle and leave the title open for the buyer to fill in. This is NOT something that we recommend as it is illegal in most states but it is a practice commonly used in the car-flipping industry.
- Team up with a car lot. You can also team up with a local car lot and let them do the paperwork for your sale. This may cost you up to $400 per car but if you are looking to make decent cash from flipping cars it is a small fee to pay.
Typically you will only want to flip cars that are on the lower end of the price margins. Higher end, more expensive vehicles don’t do well in the car flipping market. This is because (most of the time) people who are buying more expensive vehicles are buying the vehicles directly from the dealership itself.
What to Look For When Flipping Cars
If you decide you want to flip cars for extra cash you will want to have some basic knowledge of cars overall. If you don’t know anything about the car you are selling you are less likely to be able to turn a profit. Most people who flip cars use sites like Craigslist to purchase the vehicles. If there are major problems you may actually end up losing money on the car instead of turning a profit.
Where to Buy the Cars
In my opinion, the best place to buy a car you are looking to flip is through a private seller. Craigslist is a great place to start looking for cars to flip. You can also check your newspaper and other online selling sites where you can go see the car locally. You won’t want to purchase the vehicle online without viewing it first though.
It should also be noted that you should not make the purchase unless you feel confident you can turn a profit. For instance, if the vehicle will cost a ton of money to fix to sell it may not be worth the initial purchase. Additionally, you should never buy a car with the check engine light on. The only reason you should purchase a car with the check engine light on is if you have a code reader and are able to fix the problem with ease.
Flip Cars for Extra Cash
With those things in mind, you are ready to start flipping cars. The first place you should check for potential vehicles to sell is Craigslist. Go to the car/truck section of the site and fill in the “max price” and “min price.” Obviously you don’t want to pay too much for the vehicle or you won’t likely make any money from the sale. You also don’t want to pay too little for the car because it will likely have more problems and need more work to be able to sell.
My Personal Experience
I started off with a $1,000 car that had bad CV Axles. The outside was clean, the interior wasn’t the best, but here in Colorado, AWD cars are very reliable due to the snow and have a higher street value than most people think. Find a car you think you could flip, and make sure you look at it in person. Once you’ve seen the car in person, check all of the cosmetics like the tires, paint and any body damage to the car. If you don’t think you can flip it due to dents, etc. move on to the next vehicle. Don’t waste your time. You will also want to make sure fluids like oil and coolant are at the correct levels.
You will also want to test drive the car. Most people on Craigslist will allow you to drive their car but you’ll want to be safe. The car isn’t yours yet! Ask if you can take the car on the closest main road and, if there is a highway nearby, ask to drive the car on the highway as well. Check for any strange noises and be sure everything runs normal. I try to get the car up to 80 to 85 MPH just to be sure that the engine can take it. You should also keep an eye on the temperature gauge to be sure it maintains normal temperature.
Once you’ve seen and driven the car, check sites like Kelley Blue Book and Nada Guides to determine how much the vehicle is worth before you buy it to flip. I try to buy cars that have less than 130,000 miles and little cosmetic wear. It is also a huge plus if the owner has maintenance records for the vehicle. If the car has recorded maintenance it can actually increase the value of the car and will make it easier for you to sell.
When all is said and done, make sure that you are paying attention to the vehicle and its issues. You don’t want to purchase a car that is severely damaged.
Selling the Car
You basically switch roles with the person you’ve just purchased the car from. If there is anything major that needs to be fixed with the car, you should fix it before selling it again. Most people will refuse to pay for something that doesn’t work correctly or try to strike a hefty deal. When you are in the business of flipping cars, you are trying to pull a profit. You don’t want to lose money on the deal. Also remember that honesty is the best policy. If you know something is wrong with the vehicle be sure to tell the buyer about it.
Where to Sell the Car
You will be returning to Craigslist to sell the car. You can also post it on other online sites or even in your local newspaper if you aren’t comfortable with Craigslist or aren’t having luck selling your vehicles there. Craigslist, however, is usually the best.
Remember that people are coming to you for the car which means they are already interested. A lot of people are looking for cars so don’t sell your vehicle short of its worth. You may also want to ask the buyer to pay taxes on the vehicle for selling the car. If they don’t you may end up paying taxes on the car at the end of the year.
Can You Flip Cars for a Profit?
Although it can be rather difficult, like any other self-run business, flipping cars is a great way to make extra cash. In some cases you can earn $1,000+ on one single sale. However, as mentioned above, it will depend on what the law for your specific state is. Depending on where you live, you may be limited to the number of cars you are able to flip, how many taxes you pay and how much money you are able to make from your car business each year. Use this map to find out what you need to do to be able to flip cars in your state.
Try to find a nice looking and good running car. After you find one, look up the value of the car using the two links mentioned above, and if you think it’s worth it, go test drive the car. If it runs good, has no signs of engine or transmission damage, you can try to flip it for more. There’s many aspects when it comes to car flipping, you just have to concentrate and think logically.
If you found this topic interesting, join the discussion with Dimitry in the Saving Advice forums. You can also check out the video below:
Photo: JOHN LLOYD