If you are thinking of starting a car flipping business, you are definitely in for a really lucrative venture. Even though the used car market is one of the most competitive, there is plenty of money in there to go round. You only need to know your onions. Know how to buy undervalued cars at low prices and sell them high. You also need a good knowledge of the local automotive marketplace. In this post are some tips to get you started with flipping used cars for gain.
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Tips for Starting a Car Flipping Business
Let’s learn about “How To Start A Car Flipping Business” in detail:
#1: Plan Your Car Flipping Business
To start a successful car flipping business, you will need to get the basics right. Having a solid plan will help achieve more with the business even in the face of fierce competition. Some things you need to get right in your plans include:
Survey the landscape
One easy way to be ahead of the competition in the car flipping market is to go after local buyers. Look around your area to determine what type of used cars or trucks are popular there. To get a better hang of what the trend looks like, you can visit the department of motor vehicles and request the statistics of used car sales statistics in your area. Once you have a clear picture of what the demands look like, it will foster your other steps in the business.
Determine what type of cars to flip
Create a niche for yourself. Will you prefer to go after used cars – buy at low prices and resell to the highest bidder or you will prefer to buy more expensive cars for bigger gains? Also, what type of cars will you be interested in when you are first starting out?
How much money do you need to start a car flipping business?
Well, depending on the area, you should be looking anywhere between $3000 and $5000 to start out. In fact, some people start their car flipping business with as low as $500. It is always better to start with a small amount to help you mitigate any risk involved in the business.
How much money can you make flipping cars?
You can make up to 25% in profits per flip. If the total cost of buying and repairing a car is $2500, then you should be looking at selling the car for over $3000. That means you can make as much as $500. That is not a bad deal for a start!
#2: Protect Yourself from Liabilities
It is very important you get your paperwork correctly in this type of business. You don’t want to encounter a situation that leaves a heavy toll on your business. Get a local attorney to advise you on what paperwork you need to stay off problems down the line. He will also likely tell you what requirements you need to also get on the good side of the law.
#3: Get Right With the Law
To be on the right side of the law, you will need to obtain some necessary licenses and permits for your car flipping business. The most important of them is the dealer license. This usually takes time and requires lots of paperwork. But it is compulsory for all auto sellers to register as dealers. The license will cost around $1500 and may require you to get a shop or overhead. Some states also require that you have sold a minimum amount of cars before you can be qualified to get the license.
#4: Know How to Find the Right Cars to Flip
You can’t make much profit if you don’t know how to find profitable cars for your car-flipping business. So this is a big deal. Use sites such as Craigslist to find the best deals on your cars. You can also consider government auctions and Google alerts for good cars that won’t cost you a fortune. You can also use such sites as Lemon Checks and SaferCar to vet cars you want to purchase so you don’t fall victim to a scam or damaged cars.
However, when looking to buy cars for your car flipping business, here are some more things you should do:
- Set a reasonable buying budget
Looking for a good deal on your cars? You need to set a reasonable buying budget. $1500 is great for seasoned flippers. That is enough to get a good car that can fetch you as much as $500 to $800 after all expenses. However, avoid spending too much buying a flip. Spending around $5000 to buy a flip car is not reasonable.
- Visually inspect the car
Once you see a promising car, you need to take your time to inspect both the interior and exterior of the car. Check for damaged upholstery, flooring, instrumentation, dents, deep scratches on the body, etc. don’t bother yourself too much about dirt on the outside or inside, all that can be easily removed after purchase.
- Pop the hood
Next thing is to pop the hood and check the engine. Remember the engine appearance will complement the general appearance of the car. And that is part of what a potential buyer will look at when buying from you. Check the engine oil, the radiator, the belts, radiator hose, transmission, and brakes. You want to be sure they are all working fine. Or will come back to life after a minor repair (which is worth it).
- Run a VIN check
You want to be sure you are not buying a stolen car. So run its VIN with SaferCar and the National Insurance Crime Bureau to check the original owner of the vehicle.
- Negotiate a final price
Now that you know the car will make for a good buy, it’s time to negotiate or bid for the final price. If you are buying at auction, remain true to your budget and don’t get emotional along the way. If the price is going way more than your budget, let it go, you will find another.
If you are buying from a private owner, take your time to negotiate and drive the seller down to the lowest button. First, ask why the seller wants to sell the car, and you can leverage that to negotiate for a good price for you.
- Clean the car inside out and get it ready for the market
Yes, clean the car thoroughly before you list it. Appearance matters a lot when buying a car, so give your potential buyers something to whet their appetite. Vacuum every part of the interior, remove trash, clean the upholstery, clean windows, fix minor dents or scratches, and get it ready for the market.
#5: Where Do You Sell The Cars?
Now that your car is ready, you need to know where exactly to sell it. The best way to sell your cars is to list them on sites like CarGurus, Craigslist, and Autotrader. You can as well meet prospective buyers in their workplace or homes to test drive the car. You can also bring the car to the notice of the public by parking it near a thoroughfare with a “For Sale” sign on it.
#6: What Is The Easiest Car To Flip?
This is one common question beginner flippers do ask. Well, if you are just starting out with a car flipping business and don’t know where to start, you can consider going for Japanese cars like Toyota or Honda cars. Toyota Corolla and Honda Civics are two cars that never seem to lose steam in the market. You can go for them.