• Buying Guides

What Is Flipping Cars and How Do You Flip Cars?

By Michael O'Connor | September 7, 2022

What is Car Flipping?

The business of flipping cars involves buying a used car and selling it for a profit. Generally, flipping is done privately without the involvement of a dealership, and the process is relatively quick, and the goal is to buy and sell the vehicle in a short amount of time while making money without putting in too much.

There are several ways to do this, and it's important to understand what goes into a business like this.

Car flipping can be very profitable, especially if you're knowledgeable about cars and know what to look for when making a purchase. Since you want to buy the vehicle for as little as possible and sell it for as much as possible, knowing how to get a good deal is crucial.

That's the way to potentially make a tidy profit with a good idea of what the market is like in the area and where to get cars for a low price.

These days, it seems that everyone is talking about how to make extra money on the side and how to have a successful side hustle.

If you've been thinking about ways to supplement your regular paycheck, there are many options, but choosing one that works and is sustainable in the long run can be challenging.

But flipping cars could be a good option if you love cars and are interested in the ins and outs of buying and selling them.

Flipping cars essentially means buying and selling vehicles with the express purpose of making a profit. Sometimes this can depend on good luck, and other times it involves repairing them and giving customers extra value for a previously cheap car. Knowing what goes into car flipping and how the process works can help determine if it's right for you.

Difference Between Flipping and Reselling

While flipping and reselling are similar, the goals and outcomes are different. For example, when reselling a vehicle, you're usually either trying to make room for a new car or getting money for a new one. And sometimes, you just want to get rid of the vehicle to not deal with it anymore.

However, when flipping cars, the goal is to make as much money as possible on the sale. That means you'll have to put a lot of time and effort into researching the market and ensuring the car you are flipping is as valuable to the buyer as possible. Because of this, it helps to know a lot about cars and what potential buyers are looking for.

What to Know Before Flipping a Car

Understand the Law:
Before setting up a side business making money flipping cars, you should understand the law in your area. In some states, you can only buy and sell so many cars per year before being required to apply for a dealer's license. For example, in Indiana, you can sell 12 cars per year as a private seller. However, in California, you're only allowed to sell five. Therefore, if you make your flipping business profitable, it could be easy to surpass that number.

One of the ways you can get around this is to get a dealer's license and register as a car dealer. If you don't want to do this, it's possible to partner with a dealer in your area. The upside is that they will take care of all the paperwork and administrative tasks. However, with this option, you will have to share a percentage of the profits. Still, it might be a good way to go depending on the restrictions in your state.

Set a Budget:
If you're new to flipping cars, the best way to get started is to budget for the first purchase and stick to it. That will help you keep costs low and your profit margin higher. Having limitations like this will also force you to look for a better deal on your car purchase, which will almost always result in higher profits. So if you aren't tempted to spend more than is responsible on your first car, you'll be more likely to wait for a better deal.

Set your budget based on what used cars are going for in your area. Be realistic about what you can get for a certain amount of money and what kind of condition you should expect the car to be in. Always have a little extra money left over to get the car detailed or make improvements if you have to.

Know the Market:
The best thing you can do when selling cars is to know the market in your area. You'll make the most money if you buy and sell the vehicle locally, so you must know the demand. For example, if you live in a rural area, the need for used cars might be higher since the supply is lower.

Also, know what vehicles are most in demand where you live. For example, four-wheel-drive trucks probably won't sell as well in a big city as fuel-efficient economy cars or a Honda or Toyota hybrid. Keep this in mind as you are shopping around so you can narrow down your search and get the best vehicle for your first sale.

Study the Listings:
If you're selling cars as a private party, you must know how to read used vehicle listings properly. Being able to glean information like mileage, model year, and asking price quickly from an ad will help you efficiently search for the perfect car for resale. Look through listings and understand what information is essential and where it usually is in the ad.

What to Look for in a Car to Flip

Low Mileage:
Low mileage is one of the most important things to look for in a motor vehicle when buying it to flip. A car with less than 100,000 miles on it will be much more likely to sell and less likely to have any severe issues. Finding a good ratio of mileage to sale price is a quality that a successful car flipper will have to achieve. Low miles and a low price usually mean you can sell the car for more money to the new owner.

A Good Vehicle History Report:
Before agreeing to buy any vehicle to flip it, be sure to get a detailed vehicle history report. Using the vehicle identification number, or VIN, run a report from Carfax or AutoCheck. These reports reveal vital information about the car, whether it's been in any accidents, the registration status, and whether there are any liens on it. It's all crucial information you should have before deciding to buy a car to flip.

High Demand:
If you're going into car selling, you need to know which vehicles are in high demand in your area. Typically, the types of cars that are most popular will change from month to month. Alternatively, a region might have consistent sellers due to industry or weather.

For example, in places with colder weather, you may have a more challenging time selling a convertible than in a warmer region like Florida. One way to find out is to call around to different licensed dealers, ask what the best cars are for the area, and see if they will tell you what vehicles have been selling well recently.

Where to Buy and Sell Cars for Flipping

Auto Auctions:
One of the best places to get a good deal on cars to flip. Sometimes, government agencies will auction off cars they have used for municipal purposes, and you can often find reasonably low-mileage vehicles at these auctions. In addition, you can find specialty vehicles at dealer auctions, which are almost always in high demand, and if you know how to bid correctly, you can get them for a bargain. In most cases, auctions are a great place to find unique cars or low-mileage economy cars that are easy to flip and will be in relatively high demand.

Craigslist:
Craigslist has become one of the most popular online marketplaces for automotive sales, and it's where most people will list their car first when it comes to sell it. The advantage of Craigslist is that you can use their search and filter functions to narrow down the listings and find cars that will be best suited for flipping.

eBay Motors:
It's another valuable online marketplace resource with the added benefit of an auction option. You can pay much less than the market value estimates from Edmunds or Kelley Blue Book (KBB) if you know how to bid and keep your price low. eBay also has the added benefit of having national listings, opening yourself up to a much broader market if you are willing to travel to pick up the car you bought.

Facebook Marketplace:
It's becoming increasingly popular with automotive sellers with the bonus of Facebook's Purchase Protection to help filter out scams. You can also look at the profiles of the people selling the vehicles to make sure they are legitimate, which is incredibly helpful. Whenever possible, look for cars sold by people who regularly use the service to ensure they are above board.

Print and Newspaper Classifieds:
Believe it or not, newspaper classified ads are still a great place to find deals on used cars. In fact, the people selling their vehicles in the newspaper are more likely to be senior citizens who simply have no need for their car anymore and want it gone. That means you could get a better deal on the cars there since the sellers are highly motivated and want to get rid of the vehicle with as little hassle as possible.

How to Prepare to Flip a Car

Get a Professional Inspection:
One of the best things to do when buying a car to flip is to get it inspected by a professional mechanic. They will be able to tell you what kind of condition it is in and whether or not you need to fix up the car before you sell it. If possible, consider cultivating a regular rapport with a mechanic you trust if you plan on flipping a number of cars for extra cash.

Do a Thorough Test Drive:
Before you buy a car to flip, make sure you do a complete test drive to get a feel for it and see if any glaring issues might be a problem. Then, listen for any inconsistencies in the engine and pay attention to how the transmission shifts. If you notice anything odd, it may be best to pass on that car since those are some of the most expensive repairs to make and could cut into the profit margin.

If they are available, take your trusted mechanic with you on the test drive so they can get a good idea of the car's condition.

Detail the Vehicle:
Once you've purchased a car to flip and it's running well, take it to a professional auto detailer. They'll be able to get it looking more presentable, and you might be surprised at what a difference it will make. They should thoroughly clean the interior and exterior and reveal any dents or scratches that need attention. Making sure the vehicle is attractive is one of the most important jobs of a car flipper, so it's imperative to find a good detailer and scratch and dent-removal professional.

Take High-Quality Pictures:
Like with detailing, taking high-quality photos of the car will help you attract buyers and set your listings apart from the pack. If you plan on regularly flipping cars, you may want to invest in a more professional camera setup. Again, taking high-quality and informative photos will increase your chances of selling the car for a higher price.

Flipping cars is a great way to make extra money, and it can even be a full-time job if you're dedicated enough. By understanding what goes into the process and what you need to keep in mind if you want to make a lot of car sales, you can give yourself the best possible chance at success. As with flipping real estate, there are a lot of risks involved with flipping cars, but the potential for high rewards might make it worth it.