$3,000/Month Passive Income
Flipping Cars [Beginner Guide]
If the passive income ideas you have come across so far hold no appeal for you, maybe flipping cars might be what you have been waiting for.
But, how do you make passive income flipping cars? You can make passive income flipping cars by buying cars at a low cost ($500 each for example), and reselling them at a higher cost for profit ($2,000 each). In this example, you would make $1,500 per car. Search for highly sought, recent, low cost, good condition, low mileage cars.
Regardless of your experience level, you can make good money flipping cars. I’m guessing you have come across a car deal that was just too good to pass up, even though you did not actually make the purchase or need the car. You probably imagined you could get the car and sell it. Well, that’s precisely what flipping cars is all about. Here are some beginner (and pro) tips to help you get started flipping cars.
How to Make Passive Income by Flipping Cars
1. Flipping Cars [Legally]
2. Getting Car-Savvy by Consulting The Right Sites
Obviously, a big part of this business is being able to spot good deals on cars so that you can buy and resell easily for a profit. You cannot do that without having enough knowledge about cars. But you don’t have to know how to gauge the value of every car you can see on the road. At first, you can just focus on a few brands or models.
There are some very popular websites that can help you out with this. Here is a non-exhaustive list of sites you can check out to learn more about car models, their popularity, prices and auction costs:
3. Knowing The Resell Value of The Car
4. Choosing a Car That’s On The Market for the Right Reasons
Many of the best deals you find will typically have a sad story behind them. Maybe creditors are knocking on someone’s door threatening an auction, or someone needs to clear a hospital bill or pay some other bill and they need the car to sell fast, which is why they offer deeply discounted prices. But some people just want to get rid of their cars because they have gotten a new one, or are simply looking for a way to dispose of it because they have no more interest in it. All in all, you can’t let the reasons behind someone’s decision to sell bother you because you are offering them a way out by taking them up on their offer.
Always try to find out why someone is selling the car at such a low price as it can reveal some red flags. The last thing you want is to get a car that has no proper documentation, or has a case against it because it was involved in some crime or another. You should also have a look at the title to ensure it is clean, as you have to avoid cars that have been in wrecks. Remember that these are the very same things your buyer will look at.
5. Have The Right Friends to Help Out (aka a Mechanic)
Sometimes, the car is selling at a good price because the owner needs quick cash for some reason or another. But at other times, the car is selling so cheaply because it is actually a piece of junk. You have to avoid getting into such deals.
That is why you should have a mechanic with you as you buy a car to confirm if everything is alright. For instance, if the car has been without oil for too long, odds are that it has a lot of damage. Other things to watch out for include engine knocks, problematic shifting, timing belt changing schedules, engine sounds, transmission fluid and so forth.
Before buying the car, visit sites that sell cars and see how a car in that condition would sell at. That should help you set a good fair price on your car. Obviously, since you knew you were getting a good deal, you should find a sale price that represents a significant profit for you after you make the sale.
6. Flip a Low Cost, High Value Car
Once you buy the car you can immediately start looking for a buyer – at a higher price, of course. But you also have the option of working on the car a little so that you can enhance its value even further.
List your car on an appropriate website. For better results, ensure that you take good quality pictures of the car. Low quality photos will be unappealing and might make it seem like you are trying to hide something about the car. You can also post it on a site like Craigslist or any other site where people are hunting for good car deals.
When the phone rings or a message is sent to you regarding your listing, you should be available to answer the phone and offer any additional information the buyer might desire. Otherwise, from there, it is all about having the relevant documents in place and meeting up with the buyer so that they can check out the car and possibly make the purchase.
7. Make Flipping Cars a Passive Income Source
Pro Tips on Making the Car More Valuable
- Have the car cleaned and detailed, both inside and outside. This will be a marginal expense in comparison to the additional cash you will get for the car during its sale.
- You can have some parts replaced, but be careful about how much you spend and the amount of value it adds to the car’s price.
- On the North American market, automatic transmissions are more in demand than manual cars, as not many people know how to drive with a stick shift. In general, the opposite is true in Europe, but more so out of preference than convenience.
- Unless you are purchasing an RV or a truck, you should try to look for vehicles with mileage below 150k miles or 240k km.
- Don’t assume what the seller is saying is true. Make sure the car isn’t stolen by checking the VIN at the National Insurance Crime Bureau or on SaferCar.gov.
How Passive is Flipping Cars?
There is some notable risk in flipping cars. But these come about when you don’t know how to find good deals. For instance, if you get a car at a bloated price thinking you have a good deal on your hands, you might have to sell it off at a lower price in order to get a buyer. You might also get a car that is in terrible condition without you realizing it, which can make it more trouble than it’s worth for you.
You may also need insurance to cover other risks involved with flipping cars. If you flip cars illegally, you can also risk fines and jail time in some States. Of course, make sure to pay taxes and be truthful with your clients. Consult a lawyer to ensure you follow local regulations in your area before getting started.
ROI (Return on Investment)
Frequently Answered Questions
Is it legal to flip cars? Some States in the US allow you to purchase and resell a maximum amount of cars without a licence per year. However, sure to follow the specific requirements of your locality before getting started. You can learn more by consulting a lawyer in your area.
What are the best cars to flip? The best cars to flip are in demand, recent, low cost, good condition, low mileage cars requiring little to no repairs. Some of the best cars to flip are the most popular family-friendly and reliable brands such as Toyota, Nissan, Mazda, and Subaru.