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Is There Any Way to Flip Cars & Make a Profit?
Posted on 10/30/15 at 10:11 am
Posted on 10/30/15 at 10:11 am
I'm talking individual cars, purchased at exceptional prices. It seems to me that after paying ~9% sales tax, any room for profit is negated. Are there any legal ways around this? Maybe I just need to aim for lower-end vehicles where the margins might be higher.
9
Posted on 10/30/15 at 10:12 am to GaryMyMan
Not without a dealer license
Posted on 10/30/15 at 10:47 am to GaryMyMan
you would probably need to buy cars with issues that you could fix on your own for cheap but auto shops charge a lot for.
Posted on 10/30/15 at 10:49 am to GaryMyMan
quote:
Is There Any Way to Flip Cars & Make a Profit?
Yes, it's called a car dealership, you would know.
Posted on 10/30/15 at 11:08 am to GaryMyMan
I have a neighbor that has a dealer's license and he buys low mileage low end cars at the auto auction in Lafayette. I see him mostly with Ford Focus or Fusion. He drives 80 miles to work each day so he runs them up to 30k miles and resells.He actually makes a few bucks plus he spends nothing on a vehicle to commute.
Posted on 10/30/15 at 11:49 am to agdoctor
Yes, there is.
Posted on 10/30/15 at 12:57 pm to agdoctor
That's actually really smart - what's a dealer's license run?
Posted on 10/30/15 at 1:15 pm to Coach Guidry
Go on...
Posted on 10/30/15 at 7:13 pm to sneakytiger
I really have no idea but most licenses in the state are not more than a couple hundred bucks
Posted on 10/30/15 at 9:09 pm to agdoctor
The problem with getting a dealers's license is you have to have an actual storefront/lot, business license , insurance etc. Best bet is to find someone witha small lot you can go in with.
Posted on 10/30/15 at 9:47 pm to GaryMyMan
Got a friend who buys cars that need repairs, fixes them and sells them for a pretty fair profit. Mainly pick ups.
Posted on 10/30/15 at 10:40 pm to RogerTheShrubber
A friend here is a good mechanic, and he buys wrecks, fixes them up and sells them. Makes bank.
Posted on 10/31/15 at 7:45 am to GaryMyMan
The only way to do it without a used car dealers license or working below a used car dealer who would charge a fee would be to go to people who are selling personal cars and get the title without them signing your name too it after you buy it. In that case your just the middle man between them and the next buyer. Usually this would only work if the vehicle has problems you can fix yourself or you your buying cheap in December (people typically wanna part with a second vehicle for xmas money) and selling at tax season. Even then for it to work you're probably going to have a little bit of work to do on the vehicle to make it worth your while.
I'm from Arkansas and I flip vehicles from my house for a living but I pay a dealer an annual fee to use his license. Therefore I get access to auctions, and big car stores where I can buy trade-ins cheaper than someone who doesn't have that access and I don't have to register the cars. Here you only legally get 6 vehicles to flip per year. Being a middle man and never having your name on the title would probably classify as some form of illegal but people around here do it.
I will say it's a helluva lot harder than it looks. If your only going out to private party cars to buy and resale keep in mind most of those people know what their car is worth based on what it is and it's condition. Even if it's listed too low and they need fast cash, there's gonna be a ton of competition calling about it too. Once you get one there's no guarantee it will make profit and could lose money for unforeseen circumstances. Then you have a waiting process where your cash is trapped in a vehicle and you never know for how long.
It's been my experience that just about everyone who tries to flip cars that easy get burned, lose their money and quit. They may make money on the first few but then they get one that needs a major repair they didn't realize and they can't afford. Or, they can afford it but realize when they make it they are still going to lose on it and they can't figure out what to do; sell as a project for big loss or throw good money after bad and hope it don't need another repair before they can get rid of one that's already a loser. That combined with considering how hard they had to work to find the first couple money makers for a small margin leads them to give up.
I'm from Arkansas and I flip vehicles from my house for a living but I pay a dealer an annual fee to use his license. Therefore I get access to auctions, and big car stores where I can buy trade-ins cheaper than someone who doesn't have that access and I don't have to register the cars. Here you only legally get 6 vehicles to flip per year. Being a middle man and never having your name on the title would probably classify as some form of illegal but people around here do it.
I will say it's a helluva lot harder than it looks. If your only going out to private party cars to buy and resale keep in mind most of those people know what their car is worth based on what it is and it's condition. Even if it's listed too low and they need fast cash, there's gonna be a ton of competition calling about it too. Once you get one there's no guarantee it will make profit and could lose money for unforeseen circumstances. Then you have a waiting process where your cash is trapped in a vehicle and you never know for how long.
It's been my experience that just about everyone who tries to flip cars that easy get burned, lose their money and quit. They may make money on the first few but then they get one that needs a major repair they didn't realize and they can't afford. Or, they can afford it but realize when they make it they are still going to lose on it and they can't figure out what to do; sell as a project for big loss or throw good money after bad and hope it don't need another repair before they can get rid of one that's already a loser. That combined with considering how hard they had to work to find the first couple money makers for a small margin leads them to give up.
This post was edited on 10/31/15 at 8:02 am
Posted on 10/31/15 at 1:51 pm to carguymatt
I know a guy whose sold cars in the Atlanta area for years. He makes great money on car rentals nowadays.
Posted on 10/31/15 at 7:21 pm to kywildcatfanone
quote:Age-old profession. Years ago, knew a guy that did the same thing. Made big-time $$. Wondering how much disclosure you have to give to the buyer... and what the average net profit % is.
A friend here is a good mechanic, and he buys wrecks, fixes them up and sells them. Makes bank.
Posted on 10/31/15 at 10:26 pm to tigerpawl
Zero disclosure to the buyer. They buy at their own risk and can do their own research with the VIN if they want.
Average % profit depends mostly on size of the investment and desired turn around time a seller wants. Some guys will buy or sell or both, several per week at auction and be happy to make $200 per car. Others will generally like to average 15-45 days for $500 to $1500 on the average. A general rule of thumb for me is like in any business, a 33% marginal average is healthy regardless of investment size with the exception of the $250 to $500 investment range where you really have to figure a minimum dollar amount you have to make, to make the purchase, transport, marketing and dealing with idiot buyers worth your time.
I've got to where I can buy a car for $200 with horrible paint and horrible interior that runs and drives and has no a/c, and I won't sell it for less than $700 just b/c to make under $500 for me is not worth the trouble, unless it's more of a POS than I thought.
Average % profit depends mostly on size of the investment and desired turn around time a seller wants. Some guys will buy or sell or both, several per week at auction and be happy to make $200 per car. Others will generally like to average 15-45 days for $500 to $1500 on the average. A general rule of thumb for me is like in any business, a 33% marginal average is healthy regardless of investment size with the exception of the $250 to $500 investment range where you really have to figure a minimum dollar amount you have to make, to make the purchase, transport, marketing and dealing with idiot buyers worth your time.
I've got to where I can buy a car for $200 with horrible paint and horrible interior that runs and drives and has no a/c, and I won't sell it for less than $700 just b/c to make under $500 for me is not worth the trouble, unless it's more of a POS than I thought.
Posted on 11/1/15 at 3:15 pm to GaryMyMan
Concentrate on Kitchem and Master bath No 
Posted on 11/2/15 at 1:11 pm to GaryMyMan
quote:
It seems to me that after paying ~9% sales tax, any room for profit is negated. Are there any legal ways around this?
I'm not 100% sure, but I don't think the consignment guys have to pay the tax until the car is "re-issued" - in other words to a new owner/operator. I would check the NADA website and other resources to see if it is worth it to get set up as a used lot.
On the other hand, the key to this trade is at the buy point, not the sell (much like with most things bought and sold for profit) - why? The market pretty much sets your retail price - what the dealer and secondary market guys have to do to earn their money is volume discounts or buying at very attractive prices at the acquisition side.
But, look, baw, consignment/unbranded used lots have been springing up like weeds in my area for about a decade - SOMEBODY is making some money off the market.
Posted on 11/2/15 at 5:27 pm to GaryMyMan
quote:
Maybe I just need to aim for lower-end vehicles where the margins might be higher.
I just started doing it this summer. I'll buying low priced cars with some issues, fixing them up and selling. On my 5th right now.
1st one was too easy. Got a 99 Sunfire for $650 with no real issues, a good cleaning and new belt, I sold it for a $1100.
The problem I'm running into is people severely overvaluing what they have. Had one chick that wanted a $1000 for an 2001 Malibu that was overheating. I ended up getting it for $500, I knew (educated guess really) the intake gasket was leaking coolant. Fixed that and sold it for $1300.
What I'm seeing is there is not a lot of room for error on the low priced cars. I'm know I'm going to mess up soon, I'm prepared for that.
This post was edited on 11/3/15 at 8:13 pm
Posted on 11/3/15 at 12:28 pm to CaptainBrannigan
You DO NOT want to even think about starting your own lot unless you have about 25k capital and know a lot about used vehicles. The best way to start is to pay a dealer a one time fee, which is probably going to range from 2000-4000 to use his company name. He can register you as a legal agent. The market is saturated with new dealers popping up every day being offered floor plans the minute they step into an auction and it's beefing up the price at the buy points in auctions where they are hard to make money on.
Captain Branigan has the next best idea but sooner or later he will probably realize the time and effort to chase private party cars is not worth the reward unless he's real good at his own repairs and marketing.
Even then there's always the "crook" element in this business. Even the most honest dealers such as myself often times have to band aid or out right lie about potential major issues to get rid of stuff. If we didn't, eventually it would get to a point all our money was tied up in stuff we couldn't move and wouldn't make sense to fix.
Captain Branigan has the next best idea but sooner or later he will probably realize the time and effort to chase private party cars is not worth the reward unless he's real good at his own repairs and marketing.
Even then there's always the "crook" element in this business. Even the most honest dealers such as myself often times have to band aid or out right lie about potential major issues to get rid of stuff. If we didn't, eventually it would get to a point all our money was tied up in stuff we couldn't move and wouldn't make sense to fix.
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