If you are a car enthusiast and are looking to make a nice profit from your passion, you need to consider flipping cars for profit. This otherwise overlooked trade has seen some people make good profits and even turn it into a fully-fledged business.
It is possible that you have heard about flipping cars for profit or you might know people who flip cars for a living. Car flipping involves buying used cars, fixing them up, and reselling them at a profit.
Needless to say, you cannot just start flipping cars without knowing how it’s done. This article offers a step-by-step guide on how to flip cars for profit.
How to flip cars for Profit
There are a number of things to consider before you can start flipping cars if you don’t want to be a casualty of financial loss or worse, find yourself on the wrong side of the law.
- Don’t buy a stolen car. Make sure the person you are buying from has all the right documentation and it’s authentic.
- Avoid buying a car from person who does not seem honest. If they lie about one small thing, chances are they are lying about others things as well or withholding information.
- Make sure to get an auto dealer license and insurance before flipping cars. Operating without a dealer’s license might lead to heavy fines or jail time.
So how do you flip cars for profit?
Step 1: Buy the car at a cheap price
Your first stop should be Craigslist because you can find good quality cars at low prices on the site. Most people don’t want to pay for ads especially when they can post their ad for free on sites such as Craigslist. Therefore, you are bound to find numerous people who want to get rid of their old cars at a reasonable sites on such sites.
When you are doing your search, find cars that are being sold by individuals rather than dealers. The problem with buying a car from a dealer is that you will end up paying more for the car because the dealer is selling it for a profit.
Also, find cars you are familiar with. This involves brands you have handled before or you know something about. So when you get to the negotiating table with the seller, you know exactly what you are talking about.
You also need to ensure that you have the right information about the car. This information includes:
- Mileage and odometer records to help you tally with the details provided by the seller.
- Title issues relating to the car. The title provided should be accurate.
- Service and Maintenance records. It is important to know how many times the car was serviced, or whether it has been serviced at all.
- The total number of owners and how long each owner has had the car.
- Previous damages and whether the airbags were deployed.
The easiest way to confirm the details of the car you want to buy is by running the information through CARFAX. Using the website, you can get a history report about the car. But you have to pay a small fee to get a comprehensive report.
Step 2: Inspect the car
The next thing you need to do is inspect the car personally or get a mechanic to do it. A proper inspection should be conducted in order to get the actual value of the car. Remember, cars tend to lose value very quickly, which why it is important to inspect the car. You do want to avoid buying an old model that no buyer will be interested in.
Things you need to look out for include:
- Oil level. It is possible that your car owner might be lying about oil leakages. Should you suspect this, do your due diligence. A simple tell-tale sign of a leaking car is oil cans in the trunk.
- Transmission fluid. Transmission problems cost a lot of money to repair.
- Listen to the engine – there should not be any knocking or shrilling sounds.
- Feel the shifting
- Check any powered parts such as windows, headlights, wipers, heated seats, interior lights, etc.
One of the main reasons why you want to thoroughly inspect the car is because you will have to fix it. It also helps if you want avoid any legal repercussions that may result in selling a car that doesn’t have the right documentation.
Step 3: Estimate the value of the car
Find the value of the car once you are done with step 1 and 2. Considering you are trying to make a tidy profit, it helps to know the value of the car. The easiest way to get to know the value of the car is by visiting KBB (Kelly Blue Book), a car valuation website that provides real-world feedback.
On the site, you will be required to input all the details of the car, including the name, model number, year of production, mileage, and your location. KBB will then give you the estimated value of your car.
Step 4: Fix the Car
Once everything is in order and you have purchased the car, you will have to make repairs where necessary before selling it. This is not hard because you already know what needs fixing by the time you are buying the car.
Here are a number of steps that will get your car ready for the sale.
- Fix anything that needs fixing. Have a checklist to ensure that you do not miss anything. Since you won’t have bought a completely worn out car, it shouldn’t take you long to fix the car.
- Clean it up. This involves repainting; vacuuming the inside; replacing the floor mats if needed; cleaning the seats and removing all dirt that might have accumulated over time; cleaning the engine; taking care of all oil spills, and giving your car a nice coat of polish.
It helps to work with cars that need minimal repairs before they are ready for the sale. A car that only needs a wash and spark plugs replaced is way better than one that needs to have all of its wheels replaced. Or a car that only needs a fresh coat of paint or some polishing is way better than one that needs its timing belt replaced.
Ultimately, you don’t want to end up spending a lot of your time and money fixing a car because this will lower your profit margin. The less money you spend on car repairs, the better.
Step 5: Sell the Car
The final step is selling your car. But before you can put it in the market, you have to set a price first. To do this, you need to add up all the costs you have incurred including the cost of the car and the repairs.
For example, if you bought the car for $3000 and the repairs cost you $600, you must recover both these costs. These figures including your markup will help you work out a price for the car. Don’t forget that potential buyers will want to negotiate the price; therefore, ensure that whatever price you and the buyer finally agree on, you will still recover your costs and make a profit.
If you plan on selling the car online. Here is what you need to do:
- Take quality pictures – remember a picture is worth a thousand words. People are visual. If your pictures are of good quality, this will catch the interest of potential customers.
- Research on the price – it helps to know what the going rate for your car is on the market so you can adjust accordingly.
- List it on the craigslist or social media (Facebook, Instagram, Pinterest etc.)
- Learn how to negotiate – the art of a good salesman is knowing how to make a sale regardless of the situation. Learn what it takes to be a good salesperson. It will only serve you well in the end.
Examples of people flipping cars for a living
Are there people out there making a living from flipping cars?
Yes, there are people making a living flipping cars. A quick search on the internet will show that there are people who are actually making thousands of dollars from flipping cars.
Some of the people who have succeeded in this business include:
- Justin from The Car flip. Justin has been flipping cars since his teenage years and found success in the car flipping business. Today, Justin has his own dealership and teaches people how they can flip cars for a profit.
- Chris from Flip used cars also teaches people how to flip cars for profit. Chris posts case studies on his website of how much profit he makes with every car flip. A cursory look at his website reveals that the lowest profit he has made flipping cars is about $2000 and the most he has made is $10,000.
Flipping cars for profit is not hard, but it also not easy given that there are a couple of steps you need to take before you can actually sell the car. You also need to be smart and keen to avoid incurring losses.