I’ve never considered myself a “car flipper.” But if you look at my car buying habits, it’s hard not to think of me as someone that’s enjoyed flipping a car on occasion. I’ve done it twice now, and one time completely intentionally.
With that being said, I’ve only done it with cars I have a lot of knowledge about. While I may not make a living doing this, I’m going to share my tips and tricks with you on how to flip cars for a profit.
I don’t have a dealer’s license (required in my state if you buy and sell more than 6 cars in a calendar year) but I’ve definitely bought and sold cars over the last 7 years at a profit. In fact, I have sold two cars at a profit this year alone.
I know that the Niche Pursuits crowd is into all sorts of different ways to make money. Spencer has sold used books online, used clothing online, and we’ve seen different people from publishing businesses to FBA businesses that do really well.
Let’s dive into one more way to “side hustle” and make a few extra bucks.
- 1 Buying And Selling Cars For Profit
- 2 How I Flipped My First Car for Intentional Profit:
- 3 Fix Up Cars To Sell
- 4 Should You Try Flipping a Car?
- 5 Can You Flip Cars For a Living?
- 6 What You Need to Know When Flipping a Car
- 7 Where Should I Look To Buy a Flip?
- 8 Do You Have the Right Personality?
- 9 Good Luck On Your First Flip
Buying And Selling Cars For Profit
How I Got into Car Flipping
I have a classic Mustang obsession that started even before I could drive. My first car was a 1967 Mustang Coupe. I bought it for $1,850 back in 1995. I restored it from rust-bucket to a driveable alongside my father as a father-son project. He bought a 1968 Mustang Coupe for himself which he worked on in the garage stall right next to me. Both were 8 cylinder cars (as if there’s any other type of Mustang) and he made me work all summer to get that car running before I turned 16.
This pretty much laid the groundwork for what my wife today calls the “Mustang Obsession.”
During this time I also got a job working part time at a local shop that specialized in classic Ford Mustangs. I basically was the kid who stocked products, but they had me do some basic work on upholstery and the interior of some of their lower end cars.
Fast forward to much later in life, and I’ve bought and sold 8 different Classic Ford Mustangs since 2007, mostly as a hobby. In fact, here’s the list of cars that I’ve bought and then sold at a loss or profit.
2007 – 2016
- 1967 Coupe (First Car) – $1,000 Profit
- 1966 Coupe – $5,000 Loss
- 1965 Fastback – Break Even
- 1967 Coupe (No Engine) – $500 Profit
- 1965 Mustang Coupe – $500 Loss
- 1967 Coupe (re-purchased in 2017) – $1,000 Loss
2017 – Now
- 1967 Fastback (Dream Car) – $2,000 Profit
- 1968 Coupe (Intentional Flip) – $3,500 Profit
You might look at this and say “man – you took it in the shorts from 2007 to 2016!” You are absolutely correct – My Mustang obsession was nothing more than a “hobby” – and as the case with most hobbies, you lose money.
It wasn’t until 2017 that I actually made my first profit by intentionally purchasing a classic Mustang with the plans to sell it as a flip. Prior to 2017, I always bought Mustangs because I was passionate about them.
How I Flipped My First Car for Intentional Profit:
While I’ve sold cars over the years, this year was the first time I’d ever bought a car with the intention of turning around and selling it within 60 days for a profit. Usually I buy a car and keep it for a year or so, then sell it when I’m tired of it.
Car flipping really wasn’t something on my radar (although I did love the thrill of the hunt). I would advise against doing this with new cars because they depreciate so quickly.
In November of 2017, I bought my first car with the intention of flipping the car for profit. I had purchased a higher end mustang (my dream car which I later reluctantly sold), and made $2,000 unintentionally. When I say “unintentionally” – I mean that my original intent was to keep this car forever, and I really wish I would had, but it just wasn’t practical.
It didn’t make sense to have tons of money tied up into a classic car that was earning me very little on my investment, especially when I have 4 kids. So, I made the practical decision to sell it (at a profit of course).
Two days later after I had sold it, I went to a local car show. Since I have a history with Mustangs, I know what they are worth and what they sell for. I saw a 1968 Mustang that was priced well under market value, and I had the capital in my bank account after just selling the other higher end Mustang Fastback.
It was an easy decision. The car was in good shape, the frame was intact, there was no rust (a big deal for these old cars) and it just needed some light touch up work on the interior of the car. Since I’d had prior experience reupholstering seats, I knew that with a minimal investment of around $2,500 or so, I could sell the car for a much higher price.
It took me about 45 days to complete the project from start to finish. I put about 20 hours or so of manual labor into the car to get it prepped and ready for sale. That works out to about $175 an hour for a side project – which isn’t bad, considering I just love these cars. Plus I got to drive it around for 45 days on top of it, which is always fun.
Fix Up Cars To Sell
Buying and selling cars is just like buying and selling houses. The trick is to buy low, fix it up, and sell at a higher price point. Sometimes fixing up something like this can be pretty extensive. You may have to replace whole parts.
Other times, fixing up a car isn’t too big of a deal. It may be like my example above where you have to add a little bit of love to the inside. You might have to touch up some spots or change out some pieces that aren’t up to pay.
Sometimes a “fix” can be something as simple as taking better pictures of the car. I give my example later how I saw the same car sell for +$2,000 just because someone took better pictures.
This is one of the areas where newbies stand to lose a lot if they aren’t careful. It’s easy to be too optimistic about how much repairs will cost. I know from experience that falling in love with a car is a big mistake (just look at my $5,000 loss earlier).
It’s fine to buy a car because you love it. It’s not fine to buy a car to flip if you love it. Falling in love with a car makes us irrational. We see all the good, ignore some of the bad, and assume that any fixes will be easy and cheap.
That’s not always true.
When estimated how much it will take to fix up a car, it’s best to go on the higher side. This gives you some room for error. You never know when you’ll find new things wrong with the car, will have delays, or when things won’t go according to plan. It’s best to have some basic knowledge of cars before trying to flip them.
Should You Try Flipping a Car?
This just depends on how adventurous you are. If you have a basic knowledge of cars, and are looking at lower price points (under $5,000) and are not averse to risk, I think it’s a fun thing to try. If you get the right flip just one time, you could make a few thousand bucks in one flip, which is huge!
You just have to remember, that as with anything, there’s risk involved. If you don’t know much about cars – you’ll need to take some time to learn about them, and learn about their values before you even attempt a flip. Personally, I won’t ever try flipping anything other than cars I’m comfortable with. I know 1965 to 1968 Ford Mustangs inside & out, so I’ll always jump on one if I find a deal.
You can also quickly lose your shirt if you aren’t careful (see my 2007 to 2016 history). This last flip was finally had me breaking even after 10+ years of buying and selling cars. I’m sure I could get more aggressive, but more than likely, I’ll stick to looking for the occasional deal on a 1965 to 1968 Ford Mustang.
Can You Flip Cars For a Living?
There are plenty of people out there that flip cars full time – not just as a side hustle. Guys like Richard Rawlings from Fast & Loud will often find cars at a discounted price, do very little to them, and turn around and sell them for a higher dollar amount.
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The key is knowing where to find the value. You can also lose a lot of money by trying to flip cars if you aren’t careful (see my track record from 2007 to 2016 before you start flipping cars).
Bottom line is that there are people who do this for a living, but you have to be very good at finding deals, and you have to be extremely quick to respond, with cash in hand. For most people this isn’t a living – it’s a side hustle.
When flipping cars becomes a living, that’s generally when you get your dealer’s license and start going to car auctions to find the best deals. I know plenty of people that go to auto auctions, find reasonably priced deals, and then resell them to the retail public as a dealer. In fact, there are many dealerships that got their start this way, and it can transform itself into a legitimate dealership business.
What You Need to Know When Flipping a Car
If you decide to test your meddle by flipping a car, there are a number of things you should be aware of when picking a flip candidate. It doesn’t really matter if you are going to flip a 1929 Ford, or a 2007 Toyota Prius – there are some basic principles and balance checks you need to perform along the way. Let’s look at what’s important to know ahead of time, and what you need to research.
Disclaimer: This list is not exhaustive – there are probably more things you can/should do when flipping a car. I’m not a professional, but here are some of the things I looked out for when doing my first flip.
Know the Federal and State Laws: Depending on your state, it may be illegal to flip a car. My state allows 6 cars to be sold in a 12 month time frame without a dealer’s license. This is also the FTC used car rule. I’ve never sold more than a couple cars a year, and it’s always been because I got bored with it, until this year. There are some states that don’t allow this practice at all.
Put Title in your name: Make sure to put the title in your own name. Don’t try to sell it in someone else’s name – again, this practice is illegal.
Claim the Income on your Taxes: The tax man always cometh – make sure to claim this income as “other income” on your tax returns to ensure you don’t run into any problems.
Know the value of the car: This can be a simple as understanding what market value is for a vehicle that runs well and has either been restored, or cleaned up. Most car flippers find deals, wash them up, and resell them with better pictures at a higher amount. You need to understand market value of a used car, if you intend on finding a deal and reselling it.
Kelly Blue Book is your friend: This is mostly for cars made in the last 10-15 years. I wouldn’t use this for specialty cars or modified cars. You’ll need to do your research on those. My mustangs were sold based on local market knowledge and value.
Always bring cash: Anytime you are buying a car, you can often times offer much less than the car is worth and have a shot at getting it if you have cash in hand. It’s always tempting to sell when someone is ready to buy on the spot.
Do your title research: Buying on eBay or on Craigslist are great marketplaces but there can be a lot of junk out there, as well as hustlers. Equip yourself with knowledge and be wary of significantly lower priced cars, especially in areas where there was a recent natural disaster, like a flood. Shady sellers can cause headaches if you aren’t careful.
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Make sure you inspect the car physically: Make sure there’s no hidden accidents. Pay for an inspection if you can afford to pay $200 for a professional to look at the car if there’s room in your margin. Or ask a mechanic friend to check out the frame and make sure it’s clean.
Check the tire wear, and oil gauges, check engine lights, etc.: Check anything that may need to be replaced or could be costly to fix down the line. Common issues might be timing chains and/or brake pads that could be getting worn out.
Get it in writing before cash is exchanged: I’ve read horror stories of someone paying cash before title was signed over to the buyer, and the seller walking into the house with the cash. This caused a legal battle between the two as the buyer was stuck calling the police and a his word vs. his word case of where the cash came from. Obviously the evidence showed that the seller caused a problem – but just get everything in writing from the seller before any type of cash exchange to avoid headaches.
A picture tells a thousand words: Take great pictures when you sell! I’ve seen a car get zero interest at a $6,000 price point, and then get sold for $8,000 a month later with different pictures! Make sure the car is cleaned up and take great photos!
Where Should I Look To Buy a Flip?
There are a number of marketplaces that you can use to find a good car to flip. Every marketplace carries with it some form of risk. Some platforms are riskier than others, and some platforms are less likely to have deals than others. Let’s look at the top choices.
- Craigslist – Pretty much the #1 place to start as it’s free, but you need to do your homework
- eBay – Patience is key and you can typically call the sellers
- AutoTrader – You have to pay to list a car here, and there are lots of dealerships
- Locally – Every city has various street corners where cars are listed for sale
- Car Shows – If you are into classic cars, you can find deals at car shows
As always – YMMV depending on where you go. Craigslist is usually the most popular place to look when you are just starting out. To be “safe” when meeting on Craigslist or any marketplace for that matter – choose a crowded local location and never invite people to your home, or go to theirs.
Do You Have the Right Personality?
One thing that people often overlook is that it takes a certain person to be able to successfully be a “car flipper.” I personally am not into overselling a car’s value, unless the condition really warrants it.
Even with my two profitable sales not too long ago, there was immense value there after I did the work. It’s quite possible both of those vehicles got resold to a different buyer at a higher value than what I sold them for!
If you are an introvert that doesn’t like to interact with people, be prepared to talk when people are trying to buy a car. You don’t have to be in “sales” to successfully flip, but you have to be comfortable to talk about the car. Most people will ask “why you are selling” and I would always be honest.
Most people won’t care if it’s a flip if they really love the car. They may try to bargain you down a bit, but stand firm on the price if you know it’s a good deal. Personality type matters, and you’ll need to be prepared to stand your ground, as well as be at least conversational with people.
Good Luck On Your First Flip
If you decide that vehicles aren’t your thing – you can do this with any business model. People do this with websites, brick & mortar businesses, real estate, toys, furniture – you name it. It doesn’t have to be something that’s only done with cars.
The cost of entry on vehicles is usually lower than a fully fledged business, but other businesses may appeal to you more. If you have the capital, buying an online business that may be missing some growth potential is a fantastic way to flip something for a profit.
Flipping can lay the ground work for any type of business. It’s about taking something that has less value and refurbishing or marketing the product differently so that it has value to someone. If you have knowledge that others do not, try flipping something you have knowledge about.
Learning how to flip cars (or anything for that matter) is addicting and fun at the same time, plus it can help you understand the value of supply + demand.