Let The Car Flipping Begin!

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Have you ever wanted to flip a car? Well I just bought one yesterday that should earn me a little over a thousand bucks, and I thought it would be fun to let you in on the step by step process of my car flipping experience.

Related Article: Make Money By Flipping Cars?

What Did I Buy and Why?

For the past few weeks, I have been hunting for a 2000 or newer GMC Sierra truck. First of all, I really like this model of truck and would love to drive it myself for a while (which I will definitely do), but secondly, there is a great demand for this type of truck, especially going into the winter months. Here in Michigan, people would definitely prefer to have a four wheel drive vehicle when the snow starts to fly. With a truck purchase, I will be able to supply this high demand, and hopefully be able to make a quick buck in the process.

In my weeks of scouring for this truck, I stumbled upon a few deals, but was too late to respond to a couple of truly jaw-dropping values (this will happen – I can’t possibly expect to land every single deal that’s out there), but then another deal dropped into my lap without me even looking for it specifically. I was looking through AutoTrader the other day and spotted a 2000 GMC Sierra that looked to be in pretty good shape. The dealership was asking $5,995. If it was as clean as it appeared in the ad, its true value was probably something like $7,000, so I went over to take a look at it. As it turns out, the truck was a hunk of junk and was probably only worth $5,000, so it was not something that I could flip for a profit. But, on that same lot, another truck had just come in, a white 2004 GMC Sierra and this one looked pretty sharp. The price tag? $4,995. After tax, title, and transfer, I would have been looking at a cost of about $5,500. Now it was time to negotiate.

The Negotiation

I am not a master negotiator by trade, but I like to think I can get a good value here and there. With this truck, there were a few things that were a potential negative and enabled me to talk the owner down on his price. First, the tires were starting to get worn – they will probably get me through this winter and summer, and then I would have to replace them. Second, the third door handle was broken. And finally (the biggie), the truck didn’t seem to shift quite right. This was a gamble on my part because this could mean a bad transmission (which would probably cost a couple thousand dollars to repair), or it just needs a little transmission cleaner mixed into the regular fluid.

I first let the dealer tell me his “best price”, which actually wasn’t too bad. Instead of $5,500 out the door (after taxes and all that), he was willing to come down to $4,850. I took my time, walked around the truck again (all while doing calculations in my head) and told him I would buy the truck and leave with it today if he could get me out the door at $4,700 (an $800 reduction from the sticker price). He looked a little bit uncomfortable, but I could tell it was a possibility. Finally, he nodded in agreement and I bought myself a truck.

truck

What To Do Now

The going rate for a truck like this in good condition is probably around $7,000 today, but I have a little bit of work to do before I can slap a big price like that on it. Here’s my list of things that I could do to improve the value.

  1. Give it a good cleaning inside and out – this truck was pretty dirty and was smoked in. I need to get that smell out to make it attractive to all buyers.
  2. Paint some bare spots – there are some areas where paint chipped off and could use some fresh white paint. For about $10, I can do this without much of a problem.
  3. Smooth out that transmission – I will first try to put in some transmission aiding liquid to see if this will smooth out the shifting. If this isn’t effective, I will most likely have to get the transmission fluid flushed out and put new in. This cost could range from $10 to $100.
  4. Fix the third door handle – the handle is cracked off, but many replacement parts are available. The cost – a mere $25 and some grunt work.
  5. Fix the A/C – the air conditioning is a little wacky. It works, but some vents throw heat, and others throw air. Hopefully I can figure this out myself with no expense.
  6. Replace the front bumper fascia – The front plastic piece is cracked a bit and could use replacing. It’s not necessary, but it would make it look more sharp. The cost would be about $130.
  7. Sell it!

The Potential Upside

In total, I paid $4,700 for this truck. At the most (assuming I don’t have to replace the entire transmission), I would put in another $250 to make it look pristine, so I would be somewhere in the neighborhood of $5,000 for total expenses. Since the truck’s KBB value is about $7,500, I think I could comfortably ask $6,900 and most likely get $6,500 as the final selling price (always leave room in your price for negotiations – people like to think they got a deal). This would allow me to pocket $1,500 and get me that much closer to paying off my house!

What do you think about this buy? Am I on the right track?

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AUTHOR Derek

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.

12 Comments

  1. Good luck! I would be very worried about the transmission but I know nothing about cars! Hopefully it works out and you make money on the deal. Just remember to pay your taxes on the gain!

    • Yes, the transmission is definitely a worry. At this point I have tried the Lucas liquid fix, but it’s not totally taking care of the slippery and hard shifting. The next step will be cleaning out the transmission pan and getting into the lines with a magnet to clear out any shavings that may exist. I hope that will take care of it!

    • I really don’t feel like I’m that good at it (compared to my dad, a retired car dealer), but to get a 15% discount on a car is pretty good I would say. Hopefully this pans out!

  2. I don’t think I could do this. I am good at selling my own cars, but I didn’t just go out and buy it with the intent to flip it. Oh well, I’ll just find other ways to make money on the side.

    Good luck! Looking forward to hearing how it all turns out!

    • Hi Jon. I actually only buy cars that I really like. I’m loving driving this truck right now! If I had to hold onto it for a while, I definitely would not be disappointed. I will definitely keep you in the loop of how this flip is going. 🙂


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