Flipping cars from auctions is a great way to make money. It’s also a lot of fun and can be done on the side while you’re working full-time, or you can even turn it into a full-scale business. The concept of “car flipping” is relatively easy; you buy a vehicle at a reasonably low price, fix it up, and then sell it at a higher price for a nice profit.
Some people might think that the process of buying, fixing, and selling cars is too lengthy and complicated. However, the process has become much more straightforward and profitable with regular local auctions and the introduction of car auction websites. An average car flipper can make a profit of around $1200 per car (ridester), which is quite alluring!
What Is Car Flipping?
Flipping cars usually includes purchasing a vehicle at a low price with the intention of selling it quickly to make fast money. Usually, people prefer to flip used cars, but you can also find people flipping new cars. The buying and selling for flipping is done privately and not through a dealership. The auto market has changed in the last few years, and this is one of the numerous new opportunities that are now available to make huge profits.
Difference Between Car Flipping and Reselling
Flipping and reselling are often used interchangeably, but even though they seem similar, there is a critical difference between them. Flipping refers to buying something, fixing it up (if necessary), and selling it quickly for a profit.
Reselling, however, may or may not be for a quick buck. Some resellers can hold on to their assets for a long time, waiting for the market demand to reach a peak or for the correct buyer to show up. Used car dealerships function along the same lines – acquire pre-owned vehicles, fix them up, and then list them for sale, waiting for interested buyers to show up.
While the car flipping business might seem enticing, it isn’t without disadvantages. Let’s take a look at what’s good and what’s not.
Pros and Cons of Car Flipping
You can do car flipping for a living or as a one-time thing. Here, we have discussed some pros and cons of flipping auction cars that will help you decide to take a step toward this venture.
There are plenty of reasons why you should consider flipping vehicles:
- Quick profits: This is the main reason anyone takes up car flipping. When done right, profits can range from $500-$2000. How much profit you make depends on factors like demand, rarity, price, etc.
- Gaining mechanical knowledge: Fixing up cars gives you insight into various aspects of the vehicle. You understand the cost of repairing the mechanics, the body, or electrical repairs. This experience will help earn higher profits in future flips.
- Being your own Boss: A big reason to pursue it as a business is that you would be in charge. Flipping cars for profit requires constant effort, but you can do it alone, and all the profits are your own.
- Job Satisfaction: Having the vision to flip a car successfully can be a source of great personal pride, apart from financial returns. After a few successful flips, it will become easy to understand what makes flipping cars a profit and what leads to a loss.
Before you run off to create a car flipping business plan, take a look at the cons:
- Unanticipated Expenses: Sometimes, the car you source turns out to have hidden issues, which increases the repair budget. These may be from undiagnosed faults, mechanical defects, etc. They add up and reduce your potential profits.
- Over-Committing: This mostly happens in overestimating one’s potential. A complicated car can be challenging to deal with. Complications can lead to time delays or throw off your budget. When flipping cars, be realistic about your abilities, and outsource work when needed.
- Holding Costs: The longer you have the car, the more money you lose on maintenance and cleaning. Another major factor you need to consider is depreciation when selling a relatively new car.
- Difficulty Selling: Sometimes, you won’t find buyers for your vehicles as soon as you’re done flipping. This further increases the holding costs.
- Time-Consuming: If you’re working alone, flipping a vehicle will be a time-exhausting activity. Even with a team, you must be more present in decision-making, which would also consume a lot of time.
The Art of Car Flipping
New to car flipping? Here are steps you can take to begin your journey:
Step 1. Finding Undervalued Vehicles
You can use car auction websites to find cars on the internet quickly. They usually have a search filter that allows you to find vehicles by make, model, or price range. Salvage Bid, eBay Motors, and Auto Auction Mall are great examples of such car auction websites.
You can also visit local auctions to find cars if you are unfamiliar with how the car auction websites work. You can follow magazines, like Auto Dealer Today and Used Car Dealer Magazine, to find offline auctions. They provide helpful information, including where such events are scheduled.
Be sure to check your local classifieds. Ask friends and family for leads on good deals at a local car auction or a swap meet.
Step 2. Setting A Budget
Setting a budget for your car flip is essential. $1,500 can be set for a serviceable vehicle with moderate mileage, and you have experience flipping cars. The profit on such a deal can be between $500-$800. A higher budget can translate to a higher profit, but we advise against spending over $5,000 on purchasing a car because the number of potential buyers decreases at higher prices.
Step 3. Checking Market Value
Preparation can help you find great deals on undervalued cars. Before you go to an auction, research the market price for common models, make, trims, and model years. At a public auction, the organizers sometimes reveal the inventory beforehand, allowing you to conduct thorough research. This will help you find the undervalued vehicle that can fetch you the most profit.
Step 4. Inspecting the Interior and Exterior
Before bidding on a car, it’s time to ensure it’s in good shape. Here are some things to look for:
- Dents, scratches, and other damages – Check for all the damage sustained by the car in its previous life. You’ll need to fix them all before selling the vehicle yourself. Significant damages will drive your profits down, so you should only select cars with minor, fixable niggles.
- Rust – Rusting is one of the most common problems with old vehicles. If you see rust on a car, don’t buy it! Instead, try finding another vehicle that doesn’t have any rust problems at all.
- Low mileage – If a car has low mileage and looks like it hasn’t been driven much, this could be an ideal purchase opportunity for you!
- Potential for sale – Remember that you’re buying a car only to sell it for a profit. As such, the automobiles you select must have the potential for further sales. If there isn’t any at all (or very little), then why bother buying it?
- Documents – Never buy a car if its papers aren’t in order. As you have to sell it forward, improper documentation will only hurt your sale.
If you’re buying online, look closely at all the pictures and videos available. If possible, contact the seller directly and ask them about the details. We suggest checking the car out in person and performing a thorough vehicle inspection to know about all its flaws and shortcomings.
Step 5. Buying the Car for Flipping
If you’ve done your research and followed the steps above, you probably have a great deal in front of you. The next step is to buy a car. When purchasing through an online auction site, know what vehicle you want so you don’t waste time comparing makes and models. Any time lost will let other potential buyers swoop in and steal it.
Try to get in touch with the seller directly before bidding on their car; they may have some information that will help narrow your search (for example: how much time has passed since their last transmission service?).
That could save both parties time by avoiding unnecessary back-and-forth emails about whether or not certain things need replacing/updating/fixing. However, remember that this isn’t always possible through car auction websites.
Step 6. Fixing Issues and Getting the Car Detailed
Complete the necessary repairs and then list the vehicle for sale. The selling price will have to be reduced if the buyer has to do additional work on the vehicle before they drive it. It is an excellent practice to get the vehicle’s detailing done by a professional. The interior and exterior should be detailed to impress the buyer.
Step 7. Sell Your Car
Now, it’s time to sell. Choose the right platform to sell your vehicle – whether you want to go for offline or online means. In the former case, you can go for private buyers or a collector (if you have a classic car). For selling it online, you can choose from many different websites.
You can sell your vehicle on a regular online car retail platform, like Carvana and CarGurus, or opt for online car auctions. Choose your platform wisely, as not all have the same services and client base.
When selling cars online, write attractive description text and include high-quality images and videos with each listing so that potential buyers can get a virtual feel for the car without any hassle. If you’re unsure about spending bucketloads of money on photoshoots, try an automated car photography and editing platform like Spyne.
Flipping a car includes buying cars at a low price and selling them quickly for a profit. Auto auctions are an excellent place to buy undervalued cars for flipping, and car auctions can also be used to sell your flipped car. We have already discussed the steps to be followed from start to end, but after everything has been done well, how fast your car sells will come down to your listing. High-quality images and 360 car photography can go a long way in helping you boost your business.
If you do not want to burn a hole in your pocket for this, book a demo with Spyne today.