Car flipping is a car buying method that consists out of buying cars solely to sell them for profit. Even though some forms of car flipping are illegal, others are not, which leaves room for those with market knowledge to earn a decent profit.
In some states such as NY, you are not able to sell more than 5 cars per year without a dealer’s license, as such, you are unable to flip cars and you are also susceptible to tax fraud and other criminal charges. However, if you do acquire a dealer’s license, you are able to flip cars to a certain extent.
Your ability to flip cars depends highly on the cars in question because many upmarket manufacturers who sell limited edition cars try their best not to let you do that. A great representation is the new Ford GT, to acquire one of those you need to sign an agreement that states that you will not sell the car for 2 years after purchase.
Ferrari, Porsche, Mclaren, and many other high-end brands also have specific rules about car flipping. However, flipping ‘’regular’’ or classic cars is usually legal and unlimited if you are well within the regulatory limits.
Flipping regular cars – Buy for less, sell for more
If you go on Youtube and type ‘’car flipping’’, you are likely going to end up on a channel in which a person buys a car for cheap, invests some money into it to clean it up and get it working, and then sell it to earn a decent profit.
These types of car flipping scenarios are the most common, and they can actually earn you a decent profit depending on how well you know the market demand and the values of certain models. Most ‘’car flippers’’ tend to spend lots of time on online auctions and marketplaces to scout the perfect car.
However, a dealer’s license can sometimes cost as much as $25k, and as such, if you are not serious about flipping cars, it might be better to skip it altogether. Even though states such as NY enable you to sell a maximum of 5 cars per year, others like Indiana let you sell as much as 12.
So be sure to investigate how car flipping is regulated in your state in order to decide if it’s profitable or not.
Flipping high-end cars – Buy for a lot, sell for even more
High-end luxury cars made by manufacturers such as Ferrari, McLaren, Porsche, Bugatti, Pagani, Koenigsegg are usually sold in limited quantities which means that not everyone who wants a special edition Ferrari will be able to buy one. This applies to virtually every high-end brand out there.
For the highest-end models such as the LaFerrari Aperta for example, you had to be personally invited by Ferrari in order to allocate a single LaFerrari model. This leaves many rich potential customers without the ability to buy that very same model.
This means that these rich car enthusiasts are willing to pay $100k, $200k, or even $1 million over MSRP just to get a chance to own such a vehicle. It’s fairly understandable why Ferrari does not want their customers to flip their cars because that will negatively impact the 2nd hand market value.
Ferraris brand value is built on exclusivity which means that you need to get exclusive permission from Ferrari to sell your multi-million-dollar car. However, if you decide to sell it, you might face expensive lawsuits or a lifetime ban from buying Ferrari models from authorized Ferrari dealers.
Flipping classic cars – Buy for dirt cheap, sell for a fortune
Flipping classic cars is the greatest gamble of them all. If you want to make a sizeable profit from selling a desirable classic car, you are likely going to invest lots of time and money in order to restore a valuable classic to its previous glory.
This can sometimes mean that these processes can take years, and not many car specialists are even able to work on certain cars if they don’t offer the appropriate training and experience. Be that as it may, if you can do so personally, you are potentially in a position to earn quite a lot of money.
Classic cars are different, the classic car market is a place filled with lots of potential gold mines, but things change fast, and if you are not skilled enough, you might end up wasting money instead. Be sure to start small and safe, and if you do well, go from there.
Which skills are required for a ‘’professional’’ car flipper?
A professional car flipper needs to be on top of his game the entire time while flipping cars. The used car market is volatile, and things change quickly. This means that you need to have extensive knowledge about the market, and which cars are going up, and which ones are going down in value.
You also need to have detailing skills and access to an experienced service shop that can restore and repair the car if needed. Time is everything in car flipping because the longer you keep the car after purchase, the higher the costs. However, if you do believe a certain model will cost more in the future, you can hold onto it.
Where to scout for potential cars to flip?
The most successful car flippers out there are usually well-connected with loads of dealer networks, and they have proper access to cars that are not even on the radar yet. However, sometimes it’s just best to take your time and go through various online markets such as Craigslist, Facebook Marketplace, or eBay.
If you are also a mechanic or you have reliable access to an experienced mechanic, you can also check out places such as Copart to buy salvaged cars and later rebuild them to sell them for profit. The key takeaway is to always be on the lookout for potential gold mine cars.
What price category earns the most money in car flipping?
It depends on the car in question, and it’s not always a good idea to go big at the very beginning. The safest way is to start small with a decent budget, and later reinvest the profits to buy more expensive cars to flip.
The most lucrative price category is the high-end luxury supercar market, but only a designated few are even able to acquire such cars in the first place. As the old saying goes, money makes money, but all of that can be done with cheaper cars if you know what you are doing.