Flipping cars sounds pretty simple: buy and sell used cars for profit. Find something cheap, then turn around and sell it for more money.
There are a lot of steps involved in flipping a car, but the reality is that you can make a decent amount of side income from selling used cars.
I’m actually pretty familiar with flipping cars… errr, flipping vehicles. My husband has been doing it with vintage mopeds and scooters. Besides the fact that registering mopeds and scooters is a little different than cars, the process he goes through is pretty similar to car flipping.
He scours listings on Craigslist and Facebook Marketplace, has found mopeds sitting in the trash (for real), and he’s even had pallets of scooters shipped to our house from another state.
One of his most recent flips, two mopeds he found in the trash (don’t worry, he researched to see if they were stolen, and they weren’t), netted him $900. He put about $100 in parts and labor into the bikes, and they were both gone within a week.
My husband will also proudly tell you about one of the most profitable flips he’s ever been a part of. He and his dad flipped a 1960 15-window Volkswagen Bus that they found in a field. They bought it for $350, cleaned it up, added new tires and wheel bearings, and then sold it for $10,000.
Here’s the wild part: the thing wasn’t even running when they sold it. If you’re not familiar with VWs, that’s a pretty rare find and is easily worth 10x as much once it’s been completely restored.
It’s clear that flipping cars for profit has side hustle potential written all over it, so now let’s talk about how to flip cars.
How to Flip Cars for Cash | A Guide to Flipping Your First Car
Figure out what your state says about titles and selling cars
I’m in Missouri, and the limit on selling cars is six in a year before you need to invest in a dealer’s license. Texas, Michigan, Wisconsin, South Carolina, New York, and California limit you to five years. Washington and Oklahoma have a limit of four. Massachusetts is three, and Colorado and Florida are two.
Getting a dealer’s license is a little different in each state, but the process often involves:
- Filing tax documents through your state’s department of revenue
- Completing a criminal background check
- Obtaining liability insurance
- Getting an auto dealer bond
- Going through some kind of educational training
- Paying paperwork processing fees
You can expect to pay around $1,500 to be set up and legal to sell. That sounds like a lot, but if you think you’ll flip a lot of cars, this could be worth it.
Know what cars sell well in your area
You need to understand what the market is like in your area for used cars so you know what kind of cars are worth trying to flip.
My husband, for example, knows that people want pretty basic mopeds that run well. He can sell these no problem. Rare models or ones with high-performance modifications are best sold to collectors, which limits your market.
It’s the same for cars. Most customers want basic, mass-market vehicles with low miles. Fuel-efficient sedans and compact SUVs do well in most markets, and makes like Honda and Toyota are known for producing cars that last.
Also think about the terrain, climate, and the kinds of activities that are popular where you live. For example, if you live somewhere like Colorado, Montana, Arizona, or New Mexico, 4-wheel drive vehicles or larger SUVs might do well because of the terrain. But living in California or Florida might be a good spot to flip convertibles.
If you pay attention to what people are driving in your area, you’ll quickly see where there’s demand.
What is the easiest vehicle to flip?
The Honda Civic and Accord are two of the best-selling cars of all time. They have a pretty high market value compared to other cars of the same age, but if you find one that’s undervalued, you can make a decent profit.
Other best-selling makes and models include the Toyota Camry and Corolla, Honda Odyssey, Ford F-150, and GMC Yukons.
Related: How to Make a Full-Time Income Flipping Furniture
Where to find cars to flip
There are lots of places to find cars to flip, and you’ll probably find sources you prefer over others. The one place you want to avoid is used car dealerships. They’re not in the business of selling cars for cheap, and that’s ideally what you want to find.
The best places to buy used cars to flip are:
- Public auctions: This is where you’ll find cars that were seized by the government, repossessed by lenders, or even cars that have been abandoned. Auctions deal in volume, unlike private sellers, so they’re not as focused on getting top dollar. Most flippers say this is the best way to find cars without spending a ton.
- Craigslist: Despite the scams you hear about from time to time, Craigslist is a pretty legit place to find cars for sale. Make sure you search for private sellers and be careful when you meet with the seller. Meeting in a public place is always best (a parking lot for a big box or grocery store works well), and it never hurts to let someone else know who you’re meeting and where.
- Facebook Marketplace: Marketplace is replacing Craigslist for some sellers, so it’s worth checking out. I’d say you’re less likely to find an obvious deal, but it’s worth looking into.
- eBay Motors: It’s eBay, but for cars. Fees prevent some sellers from using the platform, but you can often find more niche-specific vehicles here if that’s what you’re into flipping.
- Driving around town: It’s less and less common for people to list “For Sale” signs in their cars, but it still happens, probably more so in rural areas.
- Check the newspaper: Yes, people still list cars for sale here. Some sellers, like older folks, prefer this method of selling over any other option, so don’t overlook the newspaper.
Know your budget and be ready with cash
Even a cheap used car is still going to have a high initial investment, and this is a cash-only business. You’ll need to set a realistic starting budget and have enough cash saved to get started.
$1,500 is a decent starting point for most flippers, although you can occasionally find cars at auction for under $1,000.
Anyone who’s been flipping cars for a while will tell you to always keep cash ready at home because you never know when something will pop up. This is a rule my husband follows pretty religiously, and it’s come in handy when there’s a new Craigslist listing he doesn’t want to miss.
The only caveat here is do not invest more cash than you can afford to lose. There’s always the risk of buying something that’s a lemon or really hard to sell. You can avoid this, but cash should be separate from your other financial obligations.
Know what a car is worth before looking at it
One of the best ways to avoid making a bad investment is to research its market value before you even check it out. Websites like Kelly Blue Book and Edmunds will give you an idea of how much you can sell a car for and they require basic information like make, model, year, and any extras.
Those valuations will help you look at cars and see if they’re being undervalued (this is how to flip cars for a higher profit). But this is just a starting point.
Having high miles, engine issues, or needing bodywork are all red flags. You might be able to see some of this from the listings, but you’ll have to really look at the car to get a better idea.
Pro tip: Public auctions typically list their inventory online before the day of the auction. You can see what’s for sale and do some initial research before going in to bid on a car. Make sure to check the pictures, because some auction vehicles have been totaled in accidents.
What to look for when buying a car to flip
A lot of the work that goes into learning how to flip cars is making sure that you’re making the right investment. A good portion of that happens when you check the car out in person.
Here’s how you will inspect and evaluate a potential flip:
- Mileage: Cars with low miles almost always sell for more, but some cars are known for being able to hit 200,000 miles or beyond. Toyotas are some of the longest driving cars, next to Chevy SUVs.
- Exterior: Rust is an expensive fix, and it can be hiding in wheel wells. Check for dents, scratches, wear around the roof rails and fenders. There are ways to get rid of dings and scrapes, but it eats into your profits.
- Interior: Does the car have a funny smell, or are there cigarette burns or stains on the seats? You can sometimes get a sense of how people maintained the car by what the interior is like.
- Engine and engine compartment: There’s a lot under there, but one of the biggest red flags is a dirty engine compartment. This means oil or other fluids could be leaking. Check the belts and see if the radiator shows signs of leakage. If you’re allowed to drive the car (not typically allowed at auctions), test the brakes, see if it runs hot, test the AC and heat, and check for transmission issues like when you’re shifting, like it doesn’t want to engage or shift smoothly. Replacing a transmission is the worst. See if the check engine light is on, and if it is, ask if you can bring it somewhere to run the code.
The most expensive repairs are to the transmission, suspension, camshaft, head gasket, catalytic converter, brake lines, and the timing belt.
Ask how long the car has been sitting. If it’s been years – you’ll run into this from time to time – that’s a warning. The car probably hasn’t been maintained, and cars also need to be driven regularly to keep things from drying out.
Cars that have been sitting for a long time can even have mice living in them… ask me how I know.
Check the vehicle’s history
Using the car’s VIN (Vehicle Identification Number), you can run a quick check on the car through a couple of different databases. You can do this on-site, and I like to keep the websites pulled up on my phone before I even look at a vehicle.
Running the VIN helps you avoid cars that won’t sell well and will help you sell a safe car.
You’ll want to run the VIN through the National Insurance Crime Bureau to make sure it hasn’t been stolen or reported as a salvage vehicle.
Having a salvage title means something happened to it – flooding or severe damage – that has caused an insurance company to deem it a total loss. Even if it’s restored, a seller probably won’t be able to get damage coverage on it. Plus according to Kelly Blue Book, vehicles with a salvage title sell for 20%-40% less. That might be good when you’re buying it, but not when you’re trying to flip a car.
The other database you should check is SaferCar.gov. You’ll learn if the car hasn’t been repaired as part of a recall in the past 15 years.
Those first two are free, but many flippers also like paying for a Carfax or AutoCheck report, which shows a vehicle’s history, including ownership and accidents.
Make an offer on the car
Auto auctions have rules about bidding, so make sure you know what they are before you start bidding – you can find this on the auction house’s website.
There aren’t “rules”, per se, when you’re buying from a personal seller, other than stay calm. Some people love negotiating (me!) and others hate it. If you’re uncomfortable with negotiations, practice on a friend.
Private sellers almost always know their bottom line, and they always list cars above that. You can get closer to their bottom line if you find out why they’re selling. Moving or needing some fast cash will motivate a seller, and this is a good reason to come with cash in hand.
Knowing your bottom line is super important too. Remember, you’ll probably have to spend some money prepping the car for sale, and negotiating to a lower cost means the flip will be more profitable.
Take care of the paperwork
There’s some paperwork involved in buying a car, whether you’re flipping it or not – it’s what legalizes the sale.
Auto auctions generally take care of this stuff for you, but buying from a private seller means you need to:
- Fill out a bill of sale: You’ll want the VIN, date, sale price, odometer reading, and names and addresses of the buyer and sellers
- Transfer the title: The seller will give you the title when you purchase the car, but it needs to be signed, dated, and then brought to the DMV. Then you’ll get a new title in the mail. This can vary state to state, so double check before you buy the car.
Avoid buying a car that has a lien on it – this means the owner doesn’t have the title because it’s not completely paid off. Speaking from experience, this can be an exhausting process for the buyer, but fortunately, it’s not something you’ll run into very often.
Getting the car ready to flip
This is a two-part process, and it’s where it’s really helpful to know a lot about cars, but even then it can be difficult to diagnose and fix every single issue.
Part 1: Find out what’s wrong with the car
Buying a diagnostics tool can give you an idea of what’s going on. You can also check out a repair site like RepairPal and run through their symptoms checker.
There are also online forums for nearly every make and model of the vehicle where you can describe what’s going on with your car and enthusiasts will help you diagnose your issues. My husband uses these kinds of groups. To find these groups, do a Google search with the make and model of the vehicle + “forum.”
Another option is to bring the car into a mechanic. But keep in mind that some auto shops are quick to overdiagnose and you can easily get caught up paying for unnecessary repairs. Making friends with your mechanic (this is a thing) can help you save money. They’ll tell you what’s wrong, and you promise to come back to them for repairs you can’t fix.
You can also Google common issues for that vehicle using the make, model, and year. This will give you an idea of where to start, and fixing these things is a good selling point.
Part 2: Fix the car
There are a lot of repairs you can do on your own, and online resources like YouTube and How Stuff Works can show you how. Or maybe you can pay a mechanically inclined friend some pizza and beer to show you how things work.
Taking your flip to the mechanic is another option, but shop around and get a second or third opinion if you don’t trust their bid.
Buyers like things like new tires and having their fluids topped off. Tires can get expensive, so you might not always want to replace them, however, if they’re really worn, the car isn’t safe to drive.
If you run into repairs that go outside of your budget, prioritize safety issues. It’s the right thing to do.
Doing a thorough cleaning of the inside and outside of the car will make it ready for pictures and showing. Professional detailing can get pricey, but for higher-end cars, it’s almost a must.
Pricing your car
Earlier in the process of flipping your car, you checked its market value. Consult that again as you list your car for sale, but also take into consideration the overall condition of the vehicle. If you weren’t able to fix every issue and stay in your budget, then that should be reflected in your asking price.
You can double-check local selling marketplaces – one you may have used to find your flip and sell it – to double-check what cars like this are selling for. You’ll be able to catch any weird market nuances.
Also, know what your bottom line price is to guarantee that you make a profit flipping your car. Stick to that dollar amount when a buyer is negotiating with you.
Listing your car for sale
You can list your car in many of the places you looked when buying it. But auto auctions are out this time.
Some people say that Craigslist isn’t the best for profitable sales, but I’ve had really good experiences on the site. This might depend on where you live. As of April 2020, Craigslist has started charging $5 for listing vehicles.
When you create your listing, be sure to include:
- Lots of pictures, including pictures of any major body flaws
- Basic details: make, model, year, mileage
- List out an extra or bonus features
- Briefly describe the vehicle’s condition
- List any work you’ve done
- List any repairs it may need in the near future
Different selling platforms require different contact methods. Facebook Marketplace, for example, allows buyers to contact you via Messenger. But because you’re probably not Facebook friends with them, be sure to check your message requests.
Listing your phone number and email address is one of the best ways to get a quick response.
Also, listing your car online doesn’t mean you can’t also put a “For Sale” sign in the window and park it at a highly visible location. Just make sure you take the online listing down when you sell the car.
Finalizing the sale
You can meet buyers in safe public places, like a grocery store or school parking lot. Be nice, friendly, and answer their questions honestly.
Let the potential buyer take the car for a drive and run the VIN if they want. They might want time to think about the sale, and that’s okay, but avoid “holding” the car for them.
Ask for cash – avoid checks, PayPal, or other online payment methods, and don’t accept financing options. And don’t forget to fill out the paperwork. When you’re flipping cars, it’s the same on the buyer and seller end.
How to flip cars for profit: The final word
I know from experience that this can be a profitable side hustle, but there’s a decent amount of work involved.
Flipping cars is easier for anyone who has experience working on cars, even if that’s basic maintenance. But the entire process gets easier after your first couple of flips.
You’ll get a better feel for looking at cars, knowing how to approach repairs, and negotiating as a buyer and seller.