Have you ever found a great deal on a car by accident? Have you then thought about purchasing the car just to sell it and make a quick buck? If I had to venture a guess, I would bet that there are quite a few of you out there that have considered flipping cars, but there’s probably only a handful of you that have actually pulled the trigger and tried to earn a quick buck with a car flip.
When you first hear the word, “flipping”, what immediately comes to mind? That’s right, houses. We all know a friend of a friend that finds piece of junk houses, fixes them up, and then sells them for an overall profit. Flipping houses can work, but it takes hard work and it requires a ton of capital. So, rather than plunking $50,000+ on a house, why not take this concept to a smaller scale and flip some cars for a few bucks?
You Must Know Your Cars
In order to find a deal on a car, you have to know the average prices of your vehicles as well as the demand of those vehicles in your area. In order to find that awesome deal, you don’t have to know the value of every car out there, just get familiar with a few of the popular ones.
About a month ago, I mentioned that I was looking for a more fuel-efficient vehicle. And, what’s one of the most dependable fuel efficient cars out there? The Honda Civic. So, for about a solid month, I watched the ads on Craigslist for this exact car. Since I’m not looking to spend my life savings on this car, I’ve really been looking for something that’s $4,000 or under, which lead me to browse all Honda Civics between the years 2001 and 2005. After looking at Civics every day for an entire month, you get pretty good at knowing what’s a good value when you see one.
Find The Perfect Scenario
When you find that car that you think is a deal, it’s time to ask yourself the scenario of the sale. Typically, if people don’t have much of a reason to sell other than “they just don’t use it that often anymore”, your “deal” is not a deal. When people don’t have a pressing reason to sell their vehicle, they typically do their homework and start out by pricing their car at a medium-high price, and then come down until somebody bites on their price.
So what’s the best scenario when you’re sniffing out a deal? To be honest, most of the deals you find could be due to sad situations. The car might have been willed to them by their father that recently passed away, someone may need the money to pay their mortgage or electric bills, or maybe a non-citizen is being evicted from the country. If the seller needs to sell the car quickly and can’t wait around for the perfect buyer who will pay their price, you could definitely have a deal on your hands.
After my month of searching for that perfect Honda Civic, I saw one that fit all of my criteria. It had no rust, was regularly serviced, had no dents, and was running perfectly as is. It needed absolutely nothing, and they had it listed for $3,000. Typically, a car like this would be listed for at least $4,000, so I was ready to jump on this deal before someone else did. When I called the number and asked why they were selling the car, they explained that they were leaving the country in 2 weeks and they weren’t coming back. Now this was a pressing reason that could lead to a deal!
Be Sure To Know the Difference Between a Deal and a Lemon
Before you purchase a vehicle, it’s always a good idea to take it to a mechanic and have it checked out. If you aren’t able to take the car to a mechanic (or if you simply don’t want to), here’s a few things that you can do to be sure you’re not buying a lemon:
- Check the oil level. If it’s dry as a cork, you might want to steer clear of this purchase. Without oil, the motor could have experienced some serious damage.
- Check the transmission fluid – the color of the fluid should be pink and should not have any metal shavings in it. If there are shavings, the transmission could lead to improper shifting, and would soon require a rebuild or an entirely new transmission.
- Listen to the engine – there should not be any knocking or shrills. If there are, this is most certainly a lemon.
- Feel the shifting – as you accelerate, pay careful attention to how the car shifts. If it seems to slide into gear to late, there may be transmission issues. This is a costly expense and should be avoided.
- Ask about the timing belt – for 2005 and earlier model cars, timing belts were used. These need to be changed every 100,000 miles or so, and if they’re not, they could snap and cause serious damage to your engine. If they don’t know if the timing belt had been changed, be very careful with your purchase.
- Check the title – make sure they have a clean title. If it is a rebuilt title, that means that the car has been in a serious wreck and was totalled. It’s a good rule of thumb to just avoid these cars all together.
Making The Flip
If you are convinced that you’ve found a solid car for an unbeatable price, it’s time to make the purchase and get it ready for resale. Here’s how you turn that deal into a money-maker:
- Clean it up! Treat that car as if you were selling your house. Clean it inside and out and you’ll see a better return on your investment.
- Take a few quality pictures – show the prospective buyers what a great looking car you have by taking a quality photo.
- Find the average listing price for your car – use either KBB.com or take a look at other cars for sale that are similar to yours
- Post it on Craigslist.org – there are so many people looking at Craigslist every day it’s crazy. If you have a quality vehicle for a reasonable price, you will definitely get some responses.
- Be available – when your phone rings, answer it. That call could be the buyer you’re looking for. Then make sure you’re available for them to look at it.
- Make the deal – Never assume that you’re going to get full asking price for your car. The buyer wants to feel like they’re getting a deal. Let them talk you down a couple hundred bucks (as long as you still made a reasonable profit) and sell them the car on the spot.
Do you think you’ll ever try to flip a car? Why or why not?
My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.