Have you been searching for an easy way to earn money on the side? Flipping cars just might be what you need. It is relatively easy to start, fun, and comes with good money. However, it can be challenging if you don’t know the right steps to follow to get the cars. You also need to be sure of the tools you need to properly access and evaluate these vehicles.
This article explains what you need to do to start a car flipping business and just how legal it is. What even is a car flipping business? Let’s find out!
What is Auction Car Flipping?
Auction car flipping is buying cars at auctions for low prices, refurbishing them, and selling them to make fast money. Ideally, car flippers go for used vehicles, but it’s common to find individuals flipping brand-new ones.
What’s the revenue like? This usually depends on market demand and the vehicle’s market value, but you can earn an average of $1,200 per car. Let’s see how exactly it works.
How Does Auction Car Flipping Work?
Car flipping involves:
- Finding undervalued cars: Research auction listings and attend local auctions to identify vehicles with potential.
- Purchasing the vehicle: Bid on cars that meet your criteria, ensuring you understand auction fees and bidding strategies.
- Refurbishing: Address any mechanical or cosmetic issues to enhance the vehicle’s appeal.
- Selling: Market the refurbished vehicle through various channels to attract buyers.
The best part of the car flipping business is that you don’t need to consider overhead costs and can have it as a side hustle.
Is Auction Car Flipping Illegal?
Yes, car flipping is legal as long as you comply with local regulations regarding vehicle sales. You should pay attention to licensing requirements, sales tax obligations, and any necessary permits.
People may think it’s illegal because of the informal nature of the transactions, but there’s nothing to worry about. It is entirely legal.
Flipping vs. Reselling: The Differences
Selling a used car involves losing some money and getting less than what you paid. Many people just sell their cars to get some finance for a new one, with no other intentions in mind.
Car flipping is the exact opposite of this. You definitely don’t want to sell at a loss because you’re out there for at least a thousand-dollar profit. It also comes with a lot of research on where to buy cheap and who or what market to sell to.
Have we answered all the questions? Let’s now take a look at the necessary steps to take to start an auction car flipping business.
How to Start an Auction Car Flipping Business
If you’re ready to start flipping cars for profit, these are the steps you should take:
READ ALSO: 20 Highly Profitable Automobile Business Ideas to Start in 2024
Get the necessary licenses
First you must ensure you have the necessary licenses and permits to flip cars. The specific licenses and permits are different depending on the state you reside, but you can expect to get a:
- Dealer’s license
- Sales tax permit
- Business license
To be on the safe side, do some research on the local regulations. This ensures that you comply with the state rules and avoid fines and penalties.
Search for undervalued vehicles
Next, you should carry out a detailed search for the best places to buy cheap and undervalued cars. Some options to consider are:
Craigslist or Facebook Marketplace
The best places to find affordable used cars are online marketplaces like Craigslist or Facebook Marketplace. This is because these cars are directly placed for sale by the owners and may have a variety of circumstances that could lower the price.
However, you need to watch out for sketchy deals and scams because they are popular on these platforms. If a deal feels like a scam, back out quickly because it most likely is.
Newspaper classified ads
These are also good sources of affordable cars that can be flipped easily to make a profit. Check if your local newspaper has a classified ads section, as this can be a good place to buy cars from senior citizens who may just want to get rid of them.
When you deal with older citizens, you are most likely to buy cheap and sell to get a profit.
Auto auctions
Local law enforcement agencies set up many auctions to eliminate vehicles that have been impounded or repossessed, often listed at low prices. These vehicles, however, may be in less-than-ideal condition, so you should be ready to carry out significant repairs afterward.
eBay motors
eBay is known not just for collectibles and vintage items but also for its used car section, which has great prices for flippers. If you prefer to buy from eBay, you should open up your search area to the whole country to get a good vehicle in good condition at an even better price.
Car dealerships
Licensed dealers are also good places to find cars to flip. You can keep an eye out for when they have sales or are clearing their lots, as this can be a good opportunity for you to buy at cheap rates.
READ ALSO: Car API Solutions for Car Dealers By Vehicle Databases
Establishing a budget
While searching for affordable vehicles, you should have a budget in your mind. Remember, you only want to buy vehicles that can be sold off as quickly as possible to make a profit, and you can repeat the process.
We would recommend sticking to a small starting budget, and with time, you can increase your budget. Look out for cars that are within $1,500 and can be sold for a profit of $500-$800. You can set a higher budget if you want but try not to go over $5,000 because it may become much difficult to sell.
Evaluating market value
Understanding the market value of potential auction cars is vital. Use online tools and resources like the Vehicle Market Value API to assess your area’s current trends and pricing structures. This data will inform your purchasing decisions and help maximize your resale profits.
With the vehicle market value API, you can check any vehicle’s dealer retail, private party, and trade-in values. This information can help you decide whether to buy the vehicle or move on to the next one.
Inspecting the interior and exterior
If the vehicle meets your budget and looks promising, it is time to conduct a proper inspection. Look for dents and other defects in the upholstery, instrumentation, and safety features.
Also, check the exterior. Check for rust, dents, dings, scratches, and more. You can also consider getting a professional mechanic to inspect it. If there are issues, you must invest a substantial amount into repair before flipping.
Addressing issues and detailing the car
Once you’ve bought a car, focus on addressing any mechanical or cosmetic issues. Quality repairs are essential if you want to have a high resale value and make profit.
You should also consider professional detailing, as it makes the vehicle look its best when listed for sale. Make sure you work on both the interior and exterior to impress buyers.
Conclusion
Starting an auction car flipping business involves careful planning, research, and execution. By following the outlined steps—finding undervalued vehicles, establishing a budget, evaluating market value, inspecting cars thoroughly, purchasing wisely, and ensuring quality refurbishment—you can position yourself for success in this competitive market.
Remember, you can use available resources like market value APIs to get check a vehicle’s value before flipping.
Frequently Asked Questions
Is there a limit to how many cars you can flip?
There is generally no strict limit on how many cars you can flip; however, local regulations may impose restrictions based on licensing requirements or tax implications.
Can you start a business flipping cars?
Yes, starting a business flipping cars is feasible with proper planning and adherence to legal requirements.
Do you have to report income from flipping cars?
Yes, according to IRS regulations, income generated from flipping cars must be reported as part of one’s taxable income.
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