Flipping cars ?
QUESTION:
Hello,
I’m not sure if you can answer this question or not, but this is about buying a used car, buying/repairing parts, then selling the car for a higher price. I’ve heard a few people do this sometimes, where they buy an old car, put a new motor in, then let’s say mags and a spoiler etc, have it painted etc so its almost like a new car, and then they sell it for a higher price than what they paid for it. Is this even remotely possible? I have doubts but I was interested if this was even possible or not. Or, is this more of a “personal project” kind of thing?
Thank you very much,
Jordan
ANSWER:
It is possible, but like any money making proposition you need to know what you are doing. Like flipping houses, flipping cars takes knowledge, sweat equity and some luck.
The process starts with buying the car right… Usually a seller has just put a ton of money into the vehicle and is frustrated that something else is wrong with it. This is when the deals start flying so the seller can just get rid of his headache called a car. You need to make sure the vehicle is resalable once it’s repaired. You can get an idea on resale value using www.kbb.com and www.nadaguides.com. Look for the private sale price, or even better, use trade-in value to get a conservative number.
The next step is evaluating how much it will cost to fix the vehicle. This is where experience comes in, since it’s not always apparent what the problem is. A minor problem may seem like a mojor one to the seller, so opportunities arise some times. I had a friend in high school who bought a Mustang which according to the owner had major electrical problems. He bought the car for $50, promptly put a new battery in it and drove it for a year. He sold it to me for $400 and I drove it for 2 years without any major problems.
If a vehicle will require a new engine, give a call to local salvage yards and price out low mileage used engines. Often times you can save a lot of money and still have a reliable vehicle. I bought a Ford Ranger for $500 from a company I was working for, put a new engine in it the next weekend (cost me $300 and around 6 hours of my time), and turned around and sold it for $3500 the next week. This was a great profit for me at the time.
It really comes down to research, and if you have the skills to do the work yourself. Don’t expect to be able to subcontract out the work to a professional mechanic and make a profit. Also for late model cars, a simple dress-up or wheel change will not provide enough margin, if any to make it worth your time. More often than not, aftermarket parts do little for the resale value of a newer vehicle.
Classic cars are another story, but even more skill, research and luck are needed. My friend Dave Lehr and I run www.classicjunkyard.com. Dave sells classic car parts on Ebay for a living and makes a good living, but has found that parts are more profitable than finished vehicles and the inventory turn over is much higher. We have put together an Ebook on how to sell car parts on Ebay at www.auctionwizards.com if you are interested in learning how to sell ANYTHING on Ebay.
Good Luck,
Kevin
