Maybe you have seen an old classic car lying around that has seen better days but could be restored and you’re wondering – is it worth it? Can you really make money by buying and flipping cars? The truth is the possibilities – and caveats – are endless.
Know Your Audience
First and foremost, as with any product to be sold, you need to find a receptive audience. When you are just starting out in the world of car flipping as a side hustle, you need to work hard to build your network.
However, there is more to making money off of flipping cars than simply knowing who to sell to. You also need to make sure that you are selling the right kind of cars to the right kind of customers, which means listening to them in the first place. Too often, people in all manner of industries think that they can “dictate the market” to customers, when in fact it’s the other way around. Consumers dictate what does and does not sell, and that includes which cars you can and should flip for profit.
Two of the biggest “genres” of car flipping are SUVs and classic cars – and they appeal to very different audiences.
Parents and families tend to be the biggest buyers of SUVs and similar vehicles. They need to transport a bunch of kids, groceries, sports equipment, and so on. A family-centric focus means that they are more likely to care about a budget option over something flashy and more expensive. They aren’t likely to be ready to splurge and spend tens of thousands of dollars on an elite two-seat sports vehicle.
Car collectors might, however, and they’re much more likely to be interested in any classic autos you may have to restore. These collectors typically have more money to spend, which means they may be willing to spend more – if they’re getting more in return. They aren’t going to be spending tens of thousands of dollars on an SUV, new or old, so you’d better have a classic quality car.
Know Your Budget
Whatever car you plan on restoring, one thing is for sure – the restoration effort is going to cost money. If you are going to actually make some money on restoring cars, you’re going to need to be careful to budget ahead of time. The last thing you want is to sink so much money into a car that you can’t make it profitable when flipping it. An SUV with an $8,000 max upside isn’t worth anything near that in repairs.
It is just as important to make sure that you know how much you want to spend on acquiring cars and for the services you’ll need to get them in good working condition. For example, if you are planning on buying classic cars, you need to know what the market for them is already like so you can know how much you can expect to spend.
Know Your Car Models
That in turn depends on you knowing your car models past and present like the back of your hand. You need to know which models are good, which to avoid, and how much these models are worth to different buyers.
For example, classic Chevys are a perennial cash cow on the resale market. People love how they look and how much they’re linked into the overwhelming nostalgia factor of 1950s America. At the same time, all of these things contribute to them being more expensive to purchase, which in turn means you need to spend more to make flipping them profitable. However, not all 1950s and early 1960s Chevys are the same cost-wise. While Corvettes from that era are incredibly beloved but also quite expensive, Bel Airs have much of the same aesthetic appeal while also being more affordable.
Cars with long production histories often have a year or two that stands out above the rest. Ford Mustangs have been produced for decades, but few years stand out like the 1965 model. VW Beetles were produced from 1938 to 2003, giving you a ton of variety, though it’s the models from the mid to late 60s that rank among the most iconic.
On the flip side, if you are selling SUVs and hybrids, your customers will care less about their style and history and more about things such as fuel efficiency, which can vary from year to year and model to model.
Know Your Car’s Condition
This should be a no-brainer, but you really need to consider the condition in which you acquire a car to determine if it will be profitable or not. If you have to spend tens of thousands of dollars to restore it, unless it’s one of the most sought after cars in the world, it’s obviously not worth it. Most cases won’t be as extreme as that, though, so you’ll need to use your judgment and budgeting skills to crunch the numbers and figure out how cost-effective a certain model can be.
This is especially hard to determine with classic cars. The demand and monetary upside for these cars can be much greater, but they can also cost a lot more to repair as well. If you are just starting out, you have a much better chance of making money by purchasing and flipping cars that are more on the family-friendly and affordable SUV side.
Know Your Experts
Finally, if you do choose to restore a classic car for profit, you may want to do so with the help of an expert. The more experts there are for a given model or type of car, the easier it can be. For example, there may not be a ton of Aston Martin or British automotive experts in the United States, but there are a ton of experts on Ford, Chevy, and American sports cars. However, you can also expect experts to charge more than you might expect to pay at a regular garage, so only use them when it’s really necessary.
By factoring all these points together, you can determine if purchasing and flipping cars will be profitable for you.