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Time For Another Vehicle Investment?

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I know it kind of sounds like an oxymoron: vehicle investment because as we all know that vehicles are typically money-pits for our bank accounts. We need to insure them, put gas in them, and repair them on a regular basis. According to Investopedia, the average cost of owning a vehicle is over $4,000 per year. So how is it that I can be so arrogant in thinking that I will earn money by purchasing a vehicle?

Well, long story short, my dad used to be a car dealer. I saw first hand how he was able to find cars for less than their blue book value, clean them and fix them up, and then sell them to a buyer for a higher price, but still in the range they were willing to pay. To be honest, I wasn’t all that interested in cleaning those cars as a kid, but I loved to search for potential deals. At any chance I got, I would pick up an Auto Trader magazine and search through the pages, hoping to find something with a lower than average price and show it to my dad for him to consider.

My Recent Car Flip

For a long time, I didn’t really have the money to try to flip cars myself (meaning, buy and sell cars for a profit – just like flipping houses), but back in October, I was able to try this tactic all on my own when I bought a 2004 GMC Sierra. The profit margin was supposed to be in the thousands, but unfortunately many things went wrong (the four wheel drive went out, sensors went bad, and I hit a deer). While I didn’t make thousands, I did still net $600 for my troubles, but this time I hope to do better.

The Next Car Flip

It isn’t for certain yet (the owner still needs to work out some details), but I may soon be the proud owner of a 2009 Honda Pilot. Five years ago, this SUV was worth $32,000 and I have the opportunity to buy it for just $8,400.

honda pilot

I have been eyeballing Honda Pilots for some time and have been getting a feel for their value. This Pilot, even though it has 185,000 miles, has been selling for around $13,000. After buying it, paying the sales tax, cleaning it up, and replacing the timing belt, I will most likely have about $9,500 into it, but hope to get at least $12,000 from the first willing buyer. Pending everything goes well, I should be able to clear $2,000 with this transaction, which will get me that much closer to my massive goal this year.

The Main Reason

You might be asking, “What goal are you talking about?” and if you are, my question to you is, “Where have you been???” Late last year, I decided to make a push to pay off the remaining $54,500 of my house mortgage by the end of this year, 2014. Yes, I may be a bit crazy, but I do have a plan to pay off the mortgage this fast, and part of that plan is to buy and sell two vehicles for an additional $1,750. So in theory, I only need to sell this Pilot for $1,150 more than my expenses and I will have accomplished this portion of the plan. It will definitely take some work and patience, but I believe that it is 100% achievable.

What do you think about this plan? Am I crazy? Or do you think I will make some money?

The Weekly Round-Up

As usual, I have browsed around the web at various personal finance article and have ready quite a few that were top notch. Here are some of the better ones from last week:

Money

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.

8 Comments

  1. My brother did car flipping for years. He was a mechanic and when an owner couldn’t pay to have the car repaired, my brother would buy it off them, fix it up, and sell it. He made good money with that, but you can only sell a certain number of cars per year in our state before you need a dealer’s license.

    • True, you can only sell a certain amount of cars in a year, but I think my state’s limit is 5 (maybe even 7). So far I have sold one, so I am well within the limit. The key is to buy and sell something that you’re going to make a decent amount with.

    • Flipping cars certainly isn’t easy. Sometimes it can take 2 or 3 months to find the right buyer for your vehicle. But, if you enjoy doing it like I do, then all the money you make from your flips will just be a bonus because it doesn’t seem like work at all.

  2. Derek,
    I’m the guy who said don’t do it on the sierra. You asked my why I said that and I didn’t reply ’cause the only reason I had was a gut feeling – how’s that for a well grounded reason? But, on this Honda Pilot – definitely do it. I read somewhere that there’s a guy doing car flips, but before he buys the car he’s going to flip, he puts an ad in the paper for whatever kind of car to see what kind of market is out there for it. Once someone responds to his ad (for the sale of a car he doesn’t even have yet) he finds that car and flips it. Something to think about. Good luck getting your mortgage paid off in 2014. We’re cheering for you here in Colorado. GO BRONCOS!!!!!!!!!!!!!

    • Haha, no what changed your mind all of the sudden? Do you have a lot for Honda Pilots? I have tried to put an ad out there on prior vehicles, and it kinds of works, but it always feels a little underhanded to me. Plus, since this vehicle still has a lien on it, it might take some time to buy, so I would rather have the vehicle on my property before advertising it. Thanks for the tip though! And good luck with your Broncos!

      • Wow, talk about typos… I’m going to try again: “Haha, so what changed your mind all of the sudden? Do you have a love for Honda Pilots? I have tried to put an ad out there on prior vehicles, and it kind of works, but it always feels a little underhanded to me. Plus, since this vehicle still has a lien on it, it might take some time to buy, so I would rather have the vehicle on my property before advertising it. Thanks for the tip though! And good luck with your Broncos!”


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