You've probably heard of flipping houses, but did you know you can also flip cars? For someone with a mind for business and a passion for cars, flipping cars can be a great way to make some extra money while working with something you love.
Is Buying And Selling Cars A Good Business
The key to car flipping success is finding and buying undervalued cars at a low cost and selling them high. That means searching Craigslist, Facebook Marketplace, eBay Motors, newspaper classified ads, and auctions to find a good deal. Keep your purchasing budget low and also budget for any repairs the car needs.
The business of flipping cars involves buying a used car and selling it for a profit. Generally, flipping is done privately without the involvement of a dealership, and the process is relatively quick, and the goal is to buy and sell the vehicle in a short amount of time while making money without putting in too much.
Flipping cars essentially means buying and selling vehicles with the express purpose of making a profit. Sometimes this can depend on good luck, and other times it involves repairing them and giving customers extra value for a previously cheap car. Knowing what goes into car flipping and how the process works can help determine if it's right for you.
Understand the Law:
Before setting up a side business making money flipping cars, you should understand the law in your area. In some states, you can only buy and sell so many cars per year before being required to apply for a dealer's license. For example, in Indiana, you can sell 12 cars per year as a private seller. However, in California, you're only allowed to sell five. Therefore, if you make your flipping business profitable, it could be easy to surpass that number.
Know the Market:
The best thing you can do when selling cars is to know the market in your area. You'll make the most money if you buy and sell the vehicle locally, so you must know the demand. For example, if you live in a rural area, the need for used cars might be higher since the supply is lower.
Study the Listings:
If you're selling cars as a private party, you must know how to read used vehicle listings properly. Being able to glean information like mileage, model year, and asking price quickly from an ad will help you efficiently search for the perfect car for resale. Look through listings and understand what information is essential and where it usually is in the ad.
High Demand:
If you're going into car selling, you need to know which vehicles are in high demand in your area. Typically, the types of cars that are most popular will change from month to month. Alternatively, a region might have consistent sellers due to industry or weather.
For example, in places with colder weather, you may have a more challenging time selling a convertible than in a warmer region like Florida. One way to find out is to call around to different licensed dealers, ask what the best cars are for the area, and see if they will tell you what vehicles have been selling well recently.
Facebook Marketplace:
It's becoming increasingly popular with automotive sellers with the bonus of Facebook's Purchase Protection to help filter out scams. You can also look at the profiles of the people selling the vehicles to make sure they are legitimate, which is incredibly helpful. Whenever possible, look for cars sold by people who regularly use the service to ensure they are above board.
Print and Newspaper Classifieds:
Believe it or not, newspaper classified ads are still a great place to find deals on used cars. In fact, the people selling their vehicles in the newspaper are more likely to be senior citizens who simply have no need for their car anymore and want it gone. That means you could get a better deal on the cars there since the sellers are highly motivated and want to get rid of the vehicle with as little hassle as possible.
Get a Professional Inspection:
One of the best things to do when buying a car to flip is to get it inspected by a professional mechanic. They will be able to tell you what kind of condition it is in and whether or not you need to fix up the car before you sell it. If possible, consider cultivating a regular rapport with a mechanic you trust if you plan on flipping a number of cars for extra cash.
Take High-Quality Pictures:
Like with detailing, taking high-quality photos of the car will help you attract buyers and set your listings apart from the pack. If you plan on regularly flipping cars, you may want to invest in a more professional camera setup. Again, taking high-quality and informative photos will increase your chances of selling the car for a higher price.
Can you make money buying and selling cars? The short answer is yes you can you make money buying and selling cars. Whether you are thinking about a small operator flipping cars as a side hustle or a large dealer group. There is a lot of money to be made buying and selling cars.
Successful used car operations can also be highly profitable. These are the sort of business you see trading from small garages and forecourts or lots. They make most of their money from car sales and finance, with additional profits again coming from upselling paint protection and warranties. But they lack the volume of both the dealer groups and single franchise operation.
However the relatively low sales numbers are more than made up for by the margins in the cars. These are typically thousands more than a normal used or new car, and in some cases run into the hundreds of thousands or millions. Meaning dealing in classics cars can be an extremely good business indeed, and in contrast to the rest of the market the stock cars are normally an appreciating asset rather than a liability. Profits are further bolstered as dealers are often very well established and own their premises and stock outright.
It might be that you aim to have enough cash to start selling two cars at the same time. Eventually, you may even be able to plan ahead so you have enough cash to purchase or lease a premises, and turn your side hustle into a full-on business.
If you're ready to buy and sell cars, you will want to make sure you have the right tools and processes in place to keep track of your money. Keeping an eye on your outgoing cash and incoming revenue is a necessary part of any successful business. But you don't need to rely on spreadsheets and manual documents if you want to make life a bit easier.
In addition, the state requires people who regularly engage in buying and selling vehicles to register with the Department of Revenue (DOR). Once registered with DOR, you can apply for a reseller permit. You can use this permit to purchase the vehicles for resale without having to pay sales tax or use tax, if you do not title the vehicle in your name.
DOR will assume that if you intend to sell vehicles three or more times in a year you are regularly engaged in the business of selling vehicles. Examples of this intention include advertising vehicles for sale on/in:
If you regularly engage in selling vehicles to consumers in Washington (whether or not you restore, modify, fix or repair the vehicle before re-selling it) the Department considers you engaged in business. This means you must obtain a tax registration endorsement. DOR requires you to get a tax registration regardless of whether you need to obtain a vehicle dealers license from DOL.
Stephen Hobbs, author of The Lazy Way to Buy and Sell Cars for Profit, shares his thoughts about how to profit from buying and flipping used cars and trucks. He shares important tips about buying cars way below value, getting the most for your cars, avoiding lemons and scams, buying at used car auctions, and more. [26 min.]
The SCDMV issues several types of licenses for buying, selling, and trading motor vehicles. The type of business that you wish to operate will determine the type of license that is appropriate for you.
To begin with, many states have restrictions on how many cars you can own in any given year without being considered a dealer. In Vermont, the limit is 12. In other states, flipping more than one car in a calendar year is enough to qualify you as a dealer. Research your local regulations and base your business in a neighboring state if need be. Look up the tax ramifications of selling cars for profit before you start.
All over the U.S., you can find car dealer auctions open to the public. That means buying cars at auction prices is an option for just about anyone, even if you don't have a dealer's license. If you're interested in buying cars at wholesale prices, take a look at our car auction guide to find out how to buy the car you want at auction, just like a dealer.
Buying, modifying and reselling cars bought at car dealer auctions can turn you a tidy profit. But if you only plan on buying cars for yourself, it's probably best to buy from auctions that are open to the public instead.
The information on this page covers VAT rules when buying or selling a car as a private person. If you need information on VAT rules for businesses, go to the page on business to business transactions.
If you want to sell cars without putting yourself in trouble, one good business etiquette to observe is to be honest upfront. There are various guidelines on selling a car, but this one should be at the top of the list.
Your car buy and sell location should be able to accommodate your business. Find a piece of land that is spacious enough to house all the cars in your inventory. The location should also be close to your target market so that you can be easily reached by potential buyers.
The tips above will get you started on the right path to take. Now you know what questions to ask and what things to look for. Make sure to further enrich your understanding about buying and selling cars before committing to anything big.
Shift.com is an online used car marketplace based in San Francisco. The company was founded in 2013 and began as a facilitator of consignment car deals. Soon after, Shift began acquiring used cars of its own and changed its business model to buying and selling cars. Today, Shift says it can handle every aspect of a used car deal, including test drives, financing, accepting a trade-in, and taking care of all the sales and DMV paperwork.
38c6e68cf9