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What to Know And How to Make Money Flipping Cars

Filed in Articles by on March 3, 2021

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If you have a thing for flipping cars and love to buy a new one every year then why not turning your passion for cars into the money-making business?

In this article, you will read how you can make a huge amount of money by flipping your used cars.

flipping cars

Many people have created a home-based business buying and selling cars. You don’t need a huge capital outlay to start this business, or even great mechanical knowledge, although really, this would give you an advantage.

What is Car Flipping?

Car Flipping is just like flipping a website. Similar to real estate flipping, car flipping is the process of buying automobiles at a low price and selling such vehicles at a higher price.

Getting Started

In theory, the secret to successful car flipping is “buy low, sell high.” In practice, it’s more complicated. Successful car flippers must;

  • Must have a basic acquaintance with state and local automotive codes, including how long it’s permissible to hold a car without registration and when frequent sellers are required to obtain dealer licenses
  • Know where to find undervalued cars for sale and how to obtain them quickly and legally
  • Understand the local used car market

Be In Sync With the Law

First, and most importantly, you need to get right with the law by making sure you have an appropriate dealer license and meet all of the requirements.

Dealer License Requirements

Every state requires prolific auto sellers to register as dealers. Applying for and maintaining a dealer license is a time-consuming, paperwork-laden affair. It’s costly too. Between license fees, surety bond fees, and various regulatory expenses, you can expect to spend at least $1,500 to get legal cars for flipping.

Places Where You Can Buy a Cheap Car

Buying a cheap car is actually fairly easy. Look for cars in these places:

  • Local car auctions
  • Newspaper classified ads
  • Craigslist
  • eBay
  • Private cars parked on the side of the road with a “For Sale” sticker on them.
  • Supermarket community boards
flipping cars

Know the Value of a Car

When you’re flipping cars for profit, you need to know how to value a car. Look for cars that are in demand and are below market price.

Asking questions about the car gives you information about its value and how much investment it might need. Find out how long the car has been sitting. Car flippers know when a car hasn’t been driven for a long time, things may break down once it starts running again or it may need considerable upkeep before you can sell it again.

Visually Inspect the Interior

Once you’re face to face with a promising car, get busy checking it for kinks. Start by visually inspecting the interior for damaged flooring, furnishings, safety features, and mechanisms. Don’t worry too much about trash and personal possessions.

If you’re allowed to enter the car or even roll down the windows, check for unpleasant odors, such as rotting food or stale smoke. Odors can be nullified with extra work, but that effort might not be worth it on a low-margin flip.

Minimum Money To Start Flipping Cars

You might be wondering how much do I need to start my car flipping business? You don’t need much of an investment to get started. Just $3000 to $5000 would do just fine for a start.

It is not wise for you to loan money from a bank or anywhere else to start this business. It is prudent to start your first car flip deal with a small amount so that you can mitigate the risk involved.

flipping cars

Pricing and Selling Flipping Cars

Use KBB and Edmunds sites to set a fair list price and a rock-bottom dollar figure that’s as low as you’re willing to go. Take the car’s honest condition into consideration and use your home ZIP code for values. Advertise in places most likely to reach your target market.

Related Read:

What to Avoid When Flipping Cars

Be aware of the bargain price cars if you see one advertised on Craigslist, eBay, your neighborhood noticeboard, and especially Facebook. I emphasize Facebook because there is all manner of scams particularly involving car sales there.

But of course, check out a car that you know is being advertised below value, you never know it could be for a genuine reason: the seller doesn’t know its value, the seller has to sell quickly due to debt or illness.

However, the most likely reason is that the car has a problem and it’s likely that the owner is well aware of it and it’s likely to be expensive to repair. Also, if you’re testing the car out your ear is attuned to so many different sounds and noises that you know you’ve got to check out, that you miss this particular one.

flipping cars

If it wasn’t already clear, flipping cars for profit is tough work. If you’re seeking opportunities to earn side income with little to no effort, check out our excellent piece on the best passive income stream ideas

Making money flipping cars can be fun and rewarding. With thorough research, patience, and a positive attitude, you can create a new and flexible income stream that puts extra cash in your pocket and puts buyers in safe, affordable vehicles.

CSN Team.

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