Flipping house, despite its popularity, is by no means the only way to turn a profit out of undervalued assets. Especially now, in the digital age, flipping cars has become a very accessible side-hustle. For many weekend mechanics, restoring a car from bumper to bumper has been a lifelong dream.
When it comes to car flipping, the key to success, at least in theory, is really not that complicated: you buy low and sell high. But as we said, that's only in theory. In practice, it gets a bit more complicated.
To be successful, you need first of all to know how to do it legally. This means that you need to have a basic familiarity with the automotive codes in your area, including how long you're allowed to keep a car without registration and at what point you're required to get a dealer license.
You'll also need to know how to find undervalued cars in your area, which means you have to have a good understanding of the local used car market.
Last, but certainly not least, this side-hustle is more suitable for hobbyist mechanics since it's not risk-free and it's easy to take a loss if you're not careful.
Legal Aspects
As we said in the introduction, you first of all need to make sure that what you're doing is legal. Every country has its own requirements in regards to flipping cars. In the beginning, since you won't be working with high volume, you probably won't need to get a dealer license which can be a time-consuming and costly process.
However, if it turns out that you really enjoy it, and you're good at it, the next logical step would be to get licensed and lease commercial space for your operation. If you're only flipping cars from time to time, you can probably get by without having to formally set up shop, as long as you don't violate local ordinances.
Where to Find Cars
Next step is to learn where you can find undervalued cars.
If you're not a licensed dealer, your best bet is to go to public auction. Once you get a license, you can go to dealer auctions which typically offer better deals, and there are fewer buyers to compete with. However, they're only open to licensed dealers.
Public auctions usually offer repossessed cars. If you live in a major city, they're rather frequent – at least once per week. In smaller towns, they take place about once every month. They offer great deals because the sellers are usually not that preoccupied with getting the most money possible. They sell in volume and quickly.
You can also find used cars on online platforms such as Craigslist, eBay Motors, Gumtree and Facebook Marketplace. Each platform has its own advantages and disadvantages.
You'll need to know what to look for. The best strategy is to sell cars that are popular in your area so you can find a lot of potential buyers in as little time as possible. There's nothing worse than getting stuck with a car that you can't sell or which you can only sell for less than you put invested in it.
Fixing the Car
Now comes the best part: actually fixing the car. Even if you're not an experienced mechanic, there are a lot of repairs you can do on your own. It also gives you an excellent opportunity to improve your skills and learn from online resources like video tutorials. For more complicated issues, it's better to have a mechanic for a friend that is willing to help you out for some beer and pizza.
For the final checkup, it's always better to take the car to a shop. If you didn't spot all the issues and the repairs are beyond your budget, you'll want to prioritize safety issues for obvious reasons.
To sell the car more quickly, you'll also want to pay attention to aesthetics. First of all, you'll want to get it thoroughly cleaned and detailed. This is a small expense, but it makes a big impact. Buyers also like new tires which can be expensive. If you start selling cars that are above average price range, you'll also want to learn more about powder coating and stove enamelling.
You might also encounter some rust. If it's just surface rust, it's pretty easy to fix by sanding through the corrosion, applying a primer and repainting the area. However, structural rust might mean you have to replace components, so be very careful when you're inspecting the car before purchase.
Listing the Car
At this stage, you get to harvest the fruits of your labour… by labouring some more. You first have to find the right platform to sell it on. In that case, you have to think of your ideal buyer based on the type of car you're selling. It could be better suited for college students, professionals or parents of multiple kids. You place your ads on the platforms which are most popular with each group.
At the same time, you don't want to put all your eggs in one basket. You can try online on multiple sites, in community centres, and you can also put a sign on your car that shows it's for sale and the contact information.
When you create the listing, try to avoid the overly aggressive salesy language because most people don't like it.
Just take good quality photos and spell out the basic characteristics. You'll also want to describe the car's condition and list any major mechanical issues the buyers should be aware of.
