I Bought a New Car to Flip!

  •  
  •  
  •  
  •  

For those of you that are unfamiliar, no I am not intending to literally flip my new vehicle purchase (as in toss it end over end into the ditch). Instead, from time to time I find a car that is super cheap that I would enjoy driving around for a while. In the meantime, I clean it up, fix a few things, and then sell it for more money than I paid for it originally (at least that is always the hope).

I flipped a truck last year and it was a nightmare! But, I still ended up making about $600 on it. A few months later I found a newer Chevy Malibu for only $4,900 and ended up selling it for a $650 profit. Those profit margins have been nice, but this time I am hoping to do even better.

How I Scored This Ride

I woke up lazily at 7:45 Saturday morning, took a wiz, then crawled back in bed, thinking about closing my peepers for another half hour or so. I had nothing planned for the day and that bed was still looking pretty nice. As I laid there snugly under the covers, I perused Craigslist for deals on local cars (as I do quite often). For the past month or so, I have been looking for a deal on a 2000 GMC Sierra (I even thought about driving to Kentucky for one that I spotted last week!). As I lay there in bed, my eyes suddenly opened wide as a 2001 GMC Sierra was staring me directly in the face!

It was a navy blue four wheel drive V8 with only 160,000 miles (these things will go at least 250,000 miles if you take care of them) and the price tag was only $4,200. I immediately called the number, hopped out of bed and started driving toward this beauty of a truck.

After a few wrong turns and an additional phone call to the owners, I found the Sierra in all of its glory. It looked pretty much as solid as the photos, but there were a few imperfections:

  • The paint was scuffed on the passenger side, but wasn’t all that noticeable
  • The ABS light and Check Engine light were on, but he assured me that these were only on because the sensors were bad (we’ll find out soon enough when I take it into the shop)
  • The 3rd door handle was missing (no biggie – I can order one of these for $12)
  • The tires were somewhat worn

After pointing out these flaws, the owner was willing to budge on the price a bit (I’m not entirely sure why, because his phone was ringing off the hook with others that were interested in the truck). I offered $3,600, he countered with $3,800, and I agreed.

Here is a photo of my new beauty perched in my driveway.

20140928 - sierra photo

The Profit Estimate

Alright, so how much can I expect to make off of this purchase? I bought this truck for $3,800 and after paying taxes and the plate transfer fees, my total cost was $4,000.

According to Kelley Blue Book, this truck is worth $6,800. If there were absolutely nothing wrong with it, I could put no money into it and sell it for a $2,800 profit (in theory). But of course, this would just be too easy.

2001 gmc value

To get the ABS brakes fixed, the worst case scenario would probably be about $500. I would then order a few other small parts and pieces that will probably total about $100. And just to be safe, let’s add another $400 for incidentals (you know, those costs that I don’t foresee now, but will end up rearing their ugly heads prior to the sale of this truck).

So, with a total fix-up cost of $1,000 and the purchase price of $4,000, I could potentially earn $1,800 on this ride. Realistically though, the future buyers will want to feel like they got a deal on this truck, so I will sell it to them for about $6,300, which would net me a $1,300 profit. That is still pretty impressive!

So what do you think? Do you think I’ll earn some money on this purchase? Have you ever bought a car to flip?

If you enjoyed this article, Get email updates (It’s Free!)


  •  
  •  
  •  
  •  
  •  
  •  
  •  

Make Money Money

Derek

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.

11 Comments

    • The truck will be my main ride for the next month or two, and in the meantime I will keep the Honda in the garage. Once I feel it’s time to cash in on the truck, then I’ll hop back in the Honda with my wad of cash in hand, driving to the bank. 🙂

  1. Looks like a nice truck, Derek. Knowing you—you will make money on it.

    • Thanks favorite aunt! 😉 I sure hope so! I’ll be taking it into the shop tomorrow to get an estimate on getting those lights off of the dash. Crossed fingers for low numbers!

  2. One of my favorite shows is Wheeler Dealers and they purchase cars and flip them just like you are doing Derek. I could see this as a potential way to make money however, I’m not so sure I would be able to repair the vehicles fast enough to justify my time investment. Best of luck Derek!
    Paul @ The Frugal Toad recently posted..Ryder Cup: The Importance of Teamwork and Leadership

    • I have never seen it, but it sounds like it would turn me into a couch potato! I don’t do a ton of the work myself, but I definitely do what I can to save money. I will tinker with this truck (which I love doing) for the next month or so to get it in perfect condition, and then I will sell it for a large profit (I hope!).

    • It is always exciting! There were a few unknowns with this one (I took it to the shop today and got the low-down), but if I can figure out how to do some of the work myself then I should still earn a decent profit.

  3. nice truck! man, i am on craigslist too whenever i can esp when i narrow down to a few possible flips. good luck on the sale and let us know how it goes.

    • Thanks! I just listed it for sale. We’ll see if I can make a few bucks on this one!


Add a Comment

Your email address will not be published. Required fields are marked *

CommentLuv badge

Related posts