Have you tried flipping cars?

[StageLeft]

As I understand it most used car dealers buy cars at auction and resell them. I've seen that auction cars are generally quite cheap. Not Porsche for $1000 like the silly ads used to say, but maybe a car that has a private party at $3000 may go at auction for $1800 or something.

Without a dealer license there are a certain number of these per year based on state that a person can do. Has anyone here done it? What are the steps required to get going? What are the main caveats? What do auction licenses normally cost and how do you find out about local ones? Do you need to trailer the car home?

 

[radioouman]

I almost did this recently. Had the opportunity to buy a car for $6500 that sells for about $7500-$8000. However, once I paid the taxes and the title and registration stuff, I was around $7200. If I couldn't sell the car for more than $7500, then I might only make $300 on the deal and that wasn't worth it to me. Too much risk to spend $7000 out of pocket to make $300.

 

[Vette73]

Those smaller/cheap auctions are usually cars that need work and most dealers (see honest) will not touch.

I did work for one used dealer and he kept the shop I was working at very busy. My Boss at the tiem went to the auction with him and tried to talk him out of some cars. He would only let us do the min. to get it running and sell it.

The larger dealer auction like manhiem have cars that are still under warranty and/or just recently out for most cars. Still get some dead ones and classics. Just helped my BiL get a 2005 STS for $17k. Most want about $22k for one like his in its condition.




If you really want to flip a car look in the used car listings for cars that need work. Do the work then flip. I did that for a couple when I was an auto tech but the real good deals to do that are not that common.

 

[SearchMaster]

Have you seen Wheeler Dealers on HDNet (I think)? They do this, but it never seems worth it. They end up making a thousand pounds or so on the transactions but poor Edd spends hours and hours and hours on the cars. I'm sure the net ends up being about $10/hour for his time.

 

[Gillbot]

The problem is, usually the ones that are open to the public have MANY MANY other people thinking about doing the same thing you are. There's a reason the dealer ones require a license to get in, it keeps the public away and prices down.

 

[exar333]

Since cars generally depreciate (minus collectible or exotics varieties) this would be pretty risky. It might be easiest to find cars with something significantly wrong with them (engine, etc) and make them drivable, and turn a profit. If you go too cheap, it seems like it would be hard to make enough profit to make it worthwhile, unless you bought and sold quite a few of them.

This sounds like something that might be OK for a side job, and if you keep your eyes open for the occasional deal, you could make some profit here and there. I just don't know how often you would be able to always find the "diamond in the rough" before someone else does.

 

[lastig21]

There are independent dealers that will purchase cars for you at these private auctions (like Manheim) for a flat fee. It might be a good idea to contact one of these guys and try your hand at a resale before fully jumping in. I don't know if these guys can bring you into the auction, or just buy what you ask them to purchase ahead of time.

 

[Kntx]

My friend's brother buys POS cars for 100-500 fixes em up and sells them for 1500 or so. For him it's basically a full time job.

 

[MiataNC]

It really comes down to how much is your time worth, and how much are you willing to lose. It's a gamble, and like any form of gambling/speculation there is risk along with the reward.

Buying a $500 clunker and flipping it for $1500 is the safest way to do this. The more you spend for the car, the less you are likely to make for it because the margins get thinner.

 

[Vette73]

Originally posted by: lastig21
There are independent dealers that will purchase cars for you at these private auctions (like Manheim) for a flat fee. It might be a good idea to contact one of these guys and try your hand at a resale before fully jumping in. I don't know if these guys can bring you into the auction, or just buy what you ask them to purchase ahead of time.

Yea I have a guy that lets me in to the Manheim auction. His rates are Car price (auction price plus Manheims fee) + $100 + 6%.

So my BiL got his sts for $15,600 plus the Manheim $310 fee. Then $100 plus 6%. So about $17000 for a car that goes for 22k or so on a dealers lot.

 

[exdeath]

Best bet would be fixing up beaters. Get a Nissan/Honda/Toyota in good shape that just has a rod through the block for $500, pick an engine from a bone yard for $500, spend a day stabbing it in, and now you have a $2500 KBB beater that you won't have much trouble selling.

 

[KIAman]

I did this a lot when I was younger. My brother worked at the local Honda dealership and would let me know when a customer was going to get the minimum "$500" trade in for their old car. Depending on the car, I'd offer them $700 then sell it privately for $1000 to $3000.

The most I made was from a 89 accord that was in immaculate condition with 88,000 miles on it. Purchased it for $700 and 2 guys gave me $3000 cash for it the very next week. It helps to keep the car in a visible location where lots of traffic go by.

 

[fbrdphreak]

Agree with others. What you might be able to do is watch for a car on Craig's List that has something substantial broken, say a head gasket or transmission, but is otherwise in great condition. Buy it for a low price, replace the part, and re-sell it. I see mid-90's cars of a variety of makes in the sub-$1K range because it needs a substantial part replacement that would be worth 3-4x that if that problem was fixed. Of course you have to have the mechanical know-how to replace an engine/transmission/head gasket/etc, but it could be fun and you'd make a little cash.

I drove stick for the first time on an early 90's Honda when my friend's Dad bought it and replaced one of the driveshafts or something on the tranny. He paid like $500 for that, the part cost a couple hundred bucks, and I think he sold it for $1500 or more.

And my buddy bought a mint 93 V6 Camaro when the engine blew due to a bad water pump on a road trip. He dropped in a fresh crate motor (still V6 for simplicity), did a full exhaust, and it was his high school play toy.

 

[Mojoed]

YES. I tried the flip thing and made some money, but it was far from fool-proof. I learned a lot in the process and I actually lost money on one car.

Since January of 2009:

- SOLD my 1993 Honda Accord for $2000
- SOLD 1991 Ford Escort for $750 (Paid $400) Had to sit on this car for 3 months though!
- SOLD a 1993 Honda Civic in need of a Head Gasket for $800. I paid $300 and literally flipped this car in hours.
- SOLD a 1995 Honda Accord for $3100. Paid $1200ish but had to put $2000 into it, mostly unknown repairs. So I lost ~$100 or so.

I then bought a 1996 Subaru Outback and 1997 Jeep Grand Cherokee with plans to flip. It was then I found out from the Virginia Dealer Board that you can only sell 4 cars in a 12 month span as a private individual. Any more than that and you need a dealer license. To get a dealer license, you gotta pass a test, pay a lot of money and you need to have at least 250 sq. feet of retail space, and lot space for a minimum of 10 cars.

So basically, I said screw becoming a dealer and I am now forced to sit on my Subaru and Jeep until January, unless I can sell them out of state.

I made some money yeah, mostly with beater cars, but it wasn't as easy as I thought. It sucked showing my second Accord about 8 times before it actually sold.

Not worth it imo unless you can do your own repairs, or "title jump". In the end I made under $1000, but learned a lot as far as what to look for in a used vehicle. I may try it again in January 2010.

 

[desy]

Steven Lang has a column at thetruthaboutcars.com called hammertime and thats exactly what he does.

 

[Slew Foot]

I bought my 2008 Acura TL-S new last year for 32K. The new 2009s are so ugly that the dealers are selling used 2008 for 34-35K now. Not really a flip but I can make some money on it if I wanted to.

 

[thomsbrain]

There was a Fifth Gear episode where Jason tried to do this with an M3. He cleaned it up really well and tried to sell it for more money, but couldn't get any more than he had paid.

 

[brblx]

there's really only two ways that this works well. one is to buy super cheap cars from classifieds (paper, craigslist, whatever) that are in generally good shape but need fairly cheap but possibly labor-intensive mechanical repairs. the other is to have a large bankroll and access to private auctions, where you might get 20-30k cars for thousands less than market value. it's hard to actually sell them for market value, though, if you don't own a dealership (and as mentioned, it's also hard to get into the auctions).

basically, if you're not a mechanic or a dealer, forget it.

 

[sindows]

I haven't done it but I heard that newly released Ferraris can commend a bit of a premium

 

[DrGreen2007]

ive done it a few times, but I never register the car in my name, I just take the title from the previous owner and hand it to the new owner.
No sales tax, registration, inspection, etc.
Like mojoed mentioned, CT also has some version of that x amount a cars a month can be sold by an individual.

Pay attention to detail, buff scratches out of the paint, clean the doorjams, clean the heater vents, clean the motor. You have to make it look perfect
(and charge the AC if your selling a car in the summer it helps sell it)