In keeping with Kimber's More Money Monday's, I thought I'd share in a nut shell how I flip cars for a little extra cash. I actually am doing this myself right now, and is something I learned from one of best friends who did very well at it, and now flips real estate. (I'll talk more about a circle of friends later) Here's the deal: I find used vehicles for sale, often times through Cars.com , and I price them using KBB.com . When I find one that I know is in more demand, with a motivated seller at or below private party pricing, I go look at it and sometimes buy it. Then I drive it for a while for free (meaning no car payment), and sell it when I'm ready, for more than I bought it for. Then I roll that money into the next vehicle, or sometimes keep a bit for myself.
Case in point. I bought my 1998 Land Rover Discovery for $5300. It was already priced well when I went to look at it. I brought along a boy who knows more about cars than I do to look at it. We decided the problem the Discovery had was a minor fix, and I made my offer for less than he was asking based on what I thought it would cost me to repair (not all need repairs- used does not equal junker), and in cash right there.
I've been driving it for a bit, and it's time to keep my money moving as well as pull some out. So last Friday, I listed it on Cars.com ($40.00) based on what other Discoveries are selling for ($6400), took it to get cleaned and detailed at the car wash ($24.99), and I'll be fielding calls and showing it until it sells. (I will make about $1000 out the door.)
I do most all of the screening work over the phone. There's an ass for every seat, and that's what I'm looking for. It fits or it doesn't.
When I show the vehicle, I go to bank or grocery store parking lot (cameras). I never show at my house or with my kids, and more often than not I bring along boy just to be careful. I'll tell them a little about the car, why I like it, point out a couple used car quirks, and then leave them alone. Like I said, it works for them or it doesn't.
I don't negotiate, I set my price lower than others and fair and I do not place myself in a position of having to sell, because I don't want to take a loss. I only accept cash, and if they have a cashiers check, I go with them to their bank to have them cash it. Better to have people just have their banks make the cashier check out to them so they can cash it and give you the cash. I always have title clear and ready to hand over when they give me the cash.
Then I usually have another vehicle lined up to go buy! I tie up my money as quickly as possible and make sure I have insurance on it. It's a fun way to make money and drive for free!
Watch for follow-ups on flipping cars on NLL in the future...
Comments (28)
I've often thought of doing this (I had a neighbor once who did) but haven't yet for various reasons. Did you have to get a dealer's license after a certain number of cars?
Posted by bluntmoney | September 18, 2006 12:50 PM
Posted on September 18, 2006 12:50
You'll have to check your state's laws. Here in AZ you can sell 6 a year without dealer's license. I have all the information and access to buy from wholesalers/auction, and I have looked into starting my own dealership. But for me it is just a fun money making hobby that I am using to fund other interests (rei!).
Posted by prlinkbiz | September 18, 2006 1:29 PM
Posted on September 18, 2006 13:29
I just found your blog and this was the first post that I read. I had not read any other portions of your site...that being said, I love the concept of More Money Mondays and will be a avid reader from here on out.
I have been scouting ebay motors and trying to figure out a way to "flip cars." I am in the middle of writing a business plan for a virtual car lot where all of the cars are sourced from auctions/previous owners and then sold using Ebay motors. Love what you are doing. In the words of my financial professor "do it as often as you can, for as long as you can."
Posted by jonny | September 18, 2006 3:20 PM
Posted on September 18, 2006 15:20
Thanks Jonny! I have never used Ebay motors, but do have a friend who used to sell Fastbacks through Ebay. Let me know if I can help hook you up with any of my car contacts. I need to be hustling a little harder with cars myself! It's like having a little goose that can lay you golden eggs! (or crap on you...lol)
Posted by prlinkbiz | September 18, 2006 3:41 PM
Posted on September 18, 2006 15:41
I am doing research on car flipping and came across your blog. I'm trying to get in touch with people that do this for a living (buy cheap cars, fix them up and sell them for a profit). Do you have any information or contacts that could help me out? I would appreciate it greatly.
Posted by Jeff Kraker | October 17, 2006 4:35 PM
Posted on October 17, 2006 16:35
Hey Jeff, I sent you an email!
Posted by prlinkbiz | October 17, 2006 6:35 PM
Posted on October 17, 2006 18:35
Wondering if you register it in your name or not? If not do the buyers get worried when your name isn't the listed owner on the title?
And if buyers ask "what's the reason for selling it?" what do you say?
Thanks. I flipped one car this past weekend and pocketed $500 in 48 hrs.
Posted by Jason | October 17, 2006 9:00 PM
Posted on October 17, 2006 21:00
It depends on the car. Sometimes I take title in my name, sometimes I have an open title, it just depends on the situation. I never lie, there are various reasons for selling a car. I find that it works for people or it doesn't and thats what it comes down to.
Posted by prlinkbiz | October 17, 2006 10:05 PM
Posted on October 17, 2006 22:05
Do you have any tips for negotiating the lowest price on a car you buy?
Posted by Larry | October 23, 2006 12:41 AM
Posted on October 23, 2006 00:41
I usually research the cars ahead of time and look first for a car that is below at at KBB private party price and/or a motivated seller and make sure there is a profit to be made. Then I will take cash to go look at the car and if I like it I make an offer less than the asking price based on what I see. Cash in hand is very powerful negotiation tool for someone who is motivated to sell. I have a set price in my mind I will not offer more than (otherwise not worth my time) and if it doesn't work out I walk away.
Posted by prlinkbiz | October 23, 2006 1:05 AM
Posted on October 23, 2006 01:05
prlinkbiz,
I can’t figure out how to email you - How do you get funding to flip the car if you don’t have a couple thousand laying around? Just a used-auto loan with a bunch of interest? Also, I’ve found a car that would be perfect to flip and it’s a BMW so I wouldn’t mind driving it around for a while either, but I don’t have the cash to go get it. Help!
Posted by Mark | October 31, 2006 1:02 PM
Posted on October 31, 2006 13:02
I thought I would throw out I do the same but I do it fast and furious at auto auctions. I buy a car for $500...take it home and detail it...then sell it for $1000. I have never held a car longer than a week. :) Like the other poster mentioned, check your laws to see if there is a limit in your area.
Posted by najia s | April 7, 2007 8:02 AM
Posted on April 7, 2007 08:02
How do you handle taxes?
Posted by Chadillac | April 17, 2007 3:30 PM
Posted on April 17, 2007 15:30
On the cars, in AZ, there is no sales tax on things bought and sold through "the paper".
Profits, taxes etc. are best figured out with an advisor.
Posted by prlinkbiz | April 17, 2007 4:13 PM
Posted on April 17, 2007 16:13
This is an interesting site, i believe that i'll be coming back alot. but the question i had was do you have any information on contacts? Also how to get set up with the auctions?
Posted by cardell glover | June 10, 2007 1:40 PM
Posted on June 10, 2007 13:40
The car industry is a very know-someone- to- get- in industry. You may try looking through and seeing if you can identify guys who buy and sell from auction on Craigslist ads, or your local paper.
There are guys who buy from auction, wholesalers, which requires a certain license (requirements vary). Then there are retailers and guys who do title work (the go-betweens). These also require a different license.
You can find out more about licensing by going to your local department of motor vehciles website or find the guys who are already wired in.
Posted by prlinkbiz | June 10, 2007 3:30 PM
Posted on June 10, 2007 15:30
What are the requirements in buying a car and making sure it has a clear title? What or who can give the information whether a car has a clear title? This is whether buying at an auction or a third party.
Posted by Angel | June 11, 2007 7:47 PM
Posted on June 11, 2007 19:47
I'm not sure I know exactly what you are asking. The title itself will say whether or not it is salvage. If you buy the car outright, you should get the title- look at it before you buy. Your title is your proof of ownership. If you are buying from a private seller, you will need to ask if they own it free and clear, or if they have a loan they need to pay off. If they do, the lien holder will be holding title, and it will not be released until the loan is paid in full- so the title is not free and clear in that situtation. Cars you are buying from auction will generally not have any liens on them.
Posted by prlinkbiz | June 11, 2007 11:24 PM
Posted on June 11, 2007 23:24
Hi,
Great info you have. Any tips on how to get into auctions without a dealer's license?
Posted by Janine | June 15, 2007 8:16 AM
Posted on June 15, 2007 08:16
You have got to know someone who can buy wholesale to get into the auctions. Dealers can only retail, they have to buy from wholesalers. So getting your wholesale license or getting to know people who buy at auction are your best bets. (To the best of my knowledge)
Posted by prlinkbiz | June 15, 2007 2:51 PM
Posted on June 15, 2007 14:51
I just purchased a truck for a great price and am going to turn around and sell it immediately to make some extra cash. Do you have any idea how to avoid having to register the truck and paying sales tax on it? Obviously my profit would be much, much higher if I can figure out how to avoid the sales tax. Thank you for your time!
Posted by Ryan | September 4, 2007 12:42 PM
Posted on September 4, 2007 12:42
I would love an answer to what Ryan asked. I am about to buy a new car for a very competitive price. I'm going to take out a loan, possibly buy it through my corporation. I'm going to turn around that week and sell it to someone else for a profit. I don't care if I can drive it or not ( I would try and get a permit to move the vehicle). I want to find a way to avoid the sales tax and licensing fees. Do you know of a way? Where can you find out how many cars you can sell in a year? Do you know of any states where you can sell as many cars as you want? I would love to get some car contact info of people in the business! Thanks so much for the site, it has been incredibly helpful already!
p.s. Could describe what exactly an open title is? Thanks
Posted by William | September 8, 2007 7:40 PM
Posted on September 8, 2007 19:40
I've been buying and selling cars for quite a few years now and the best book I found on the subject is here: http://www.buy-and-sell-cars-for-profit.com/ I have no interest in this guys site but know first-hand that his two books are really good.
Good luck!
George
Posted by George | September 28, 2007 3:14 PM
Posted on September 28, 2007 15:14
Regarding your questions about how to avoid having to pay sales tax on a car you are buying and selling for profit...
This would vary from each state and country, but normally when you sell a car fast (like within a few days to a week after initially buying it), then it will be up to your buyer to pay the sales tax when they go to register the car in their name.
The reason this works is because the car you bought and sold will be long gone to the new buyer BEFORE the DMV ever even gets the paperwork from the person you originally bought the car from. Of course this will only work if you do NOT transfer the car into your name...and you sell it FAST.
The reason this works is because the clerks at the DMV only care that the paperwork is filled out correctly and will access the sales tax, transfer fee and registration fee's (if reg isn't current) to YOUR buyer after they go in to transfer the ownership of the vehicle into their own name.
If you (the person flipping the car) transfer the car into your own name before selling it then you will of course get dinged for the sales tax.
Buying and selling cars is a cool way to make extra money, so good luck to you!
The Bill-ster :-)
P.S. Like a couple other posts on this page...everything I learned about this was from reading this guys book here: http://www.buy-and-sell-cars-for-profit.com/
Posted by The Bill-ster | October 30, 2007 4:43 PM
Posted on October 30, 2007 16:43
Hey there, I enjoyed your article very much. I've been wanting to get into 'flipping' cars for a while now. I have a best friend who is a 'body and paint man' and one who is a mechanic. I will have around 20k to start with (of course I don't want to spend it all on one flip, ha)and I'd be in the market for cars that are wrecked, even salvaged that can be bought cheap and fixed cheap, and sold for a profit. In my state, even with salvaged titles (rebuilt, etc) it doesn't hurt he value much as long as the work is done right and documented. I guess my question is, is it something I should invest into? I'm thinking since I have my two best friends who can do the work at dirt cheap prices, that it's worth a try. Start small and build from there, is the way I see it.
Posted by Nathan | October 31, 2007 11:02 PM
Posted on October 31, 2007 23:02
Hi, I'm starting an online community for car buyers, and resellers. You can ask questions, or leave constructive comments. Please go to my website.
http://the-car-flippers-companion.com/
Posted by Greg Boasberg | November 6, 2007 8:32 PM
Posted on November 6, 2007 20:32
What have you found to be the average time frame in which you sell the car?
--R.E.
Posted by Richard Escobedo | April 5, 2008 9:53 PM
Posted on April 5, 2008 21:53
I enjoyed reading your site. If others are interested in meeting people that flip cars, http://www.DealYourCars.com is a free site with forums. Thanks!
Posted by Deal | April 10, 2008 11:31 PM
Posted on April 10, 2008 23:31