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My two sons and I have two shops where we build hot rods for ourselves, so my one son thought it would be a good way to cover some of the rent by flipping cars now and then. He did it the right way, got a license, had our shop inspected by the county, paid the fees required, took the required classes, etc. Ended up costing him about $10K in all.
He started buying a few cars, tried to get ones that were clean and low mileage, but maybe needing a little work to make them perfect. He did it for about a year, sold some cars, and then his accountant told him to shut it down because it was costing him more than he was making. Cars even at the auction were not a great deal because the buy here, pay here guys paid top dollar for them, knowing they would make it on the financing and the repossessions.
He also became a full time mechanic, repairing those cars, and could have made more money if he just got a side job as a true mechanic. In the end, he didn't really make much money, had a lot of headaches by people calling and not showing, or trying to beat him up on the price before even seeing the cars.
So, some people may do good at it, but it wasn't his experience, and we know cars pretty well. I agree with the poster who said sell the parts, and specialize in one make or model. Much more profitable and less work.
I've known two sorts of sales to make good money in this market. One was to find insurance "totaled" cars, and refurb the body on the cheap, then move them up the food chain. The other was constantly searching auctions and sales markets for cars that fit his local market - specializing in high end stuff. So, either you need a high end market to sell to, or you do body work, is my conclusion. I don't think you can make a profit by doing the mechanical fixup anymore. Usetabe, maybe, back 40 or 50 years. But not now. If it runs, most people are not in tune with the mechanical condition.
I know someone that buys and sells as a part time job. He says the trick is to stay with specialty cars and take time as shopping for a deal as well as marketing at a good price takes work. He does well with rare unique 4WD, VW vans, an occasional sportscar, will not do mass market vehicles. Says net income varies a lot and the trick is to put as little as possible into a unit and still make it attractive to a market segment.
My friend does this and so does the guy who’s shop is next to mine. You’ll need to get a dealer’s license to be able to buy from the auctions. To get a license you’ll need to have a shop and I think it can’t be your home, but I’m not 100% sure on it? Here in MN if you sell x amount of cars, you’re required to get said license.
The guy next to me only buys Honda, Toyota, Hyundai, rarely buys American cars. Gets them all at either regular Manhiem or some Manhiem insurance auctions. Fixes more minor cosmetic things, resells not being salvaged. He does pretty well.
My mechanic friend who has a shop takes on cars people don’t want to fix, fixes them and slowly sells them. I’ll ask him if he has a dealer’s license today. You’ll have to find out if your state requires it if you sell x amount of vehicles.
Quote:
Originally Posted by Redraven
Keep in mind that many (Most? ALL?) states have laws that require you to get a used car dealer license if you transfer more than a certain number of vehicles per year. Here, I think it is 4 or 5. Many states that require a notary for title transfer will no longer allow "open titles" (that is where the buyer's name is not entered). I ran into that recently when I wanted to sell a pickup and wanted the open title so I could just enter the buyer's name and wave goodby, without having to find a Notary Public, say on a Sunday afternoon. Nope, the Notary would not sign the title!
The point is, there are likely laws, rules, and/or regulations that you will have to take into consideration.
Come to think of it, there may be a HOA and/or CCRs to consider. You might not be allowed to do what you have in mind at your residence. Better check that, too.
Good info. Thanks. Exactly the kind of feedback I was looking for. In my state it appears that 4 per year is the limit without a "license". I would probably start out slow and see where it takes me. Of course, I suppose my wife could also do 4 and that would be plenty to get started. Eight max per year would probably serve my purposes. If I could earn 1-2K per vehicle along with a few side jobs, I would consider that a good supplemental income and see where it leads.
Last edited by shaker281; 12-19-2017 at 11:26 PM..
My two sons and I have two shops where we build hot rods for ourselves, so my one son thought it would be a good way to cover some of the rent by flipping cars now and then. He did it the right way, got a license, had our shop inspected by the county, paid the fees required, took the required classes, etc. Ended up costing him about $10K in all.
He started buying a few cars, tried to get ones that were clean and low mileage, but maybe needing a little work to make them perfect. He did it for about a year, sold some cars, and then his accountant told him to shut it down because it was costing him more than he was making. Cars even at the auction were not a great deal because the buy here, pay here guys paid top dollar for them, knowing they would make it on the financing and the repossessions.
He also became a full time mechanic, repairing those cars, and could have made more money if he just got a side job as a true mechanic. In the end, he didn't really make much money, had a lot of headaches by people calling and not showing, or trying to beat him up on the price before even seeing the cars.
So, some people may do good at it, but it wasn't his experience, and we know cars pretty well. I agree with the poster who said sell the parts, and specialize in one make or model. Much more profitable and less work.
I am quite leery that there may be no profit margin. I do believe that finding the right car up front and paying a fair price is key. Plus, not letting the cost of repair price it out of the market.
Thanks. Lots of good info.
Thanks to everyone for the input. Lots to think about.
I had a girlfriends dad who did that in another life. I think your limited to just a few a year before you need a license. The thing I remember most is that you really need to be a slime ball salesman to do it. You need to look at the one selling the car and with a straight face lie your arse off as to how big a POS that car is they are selling. He did not care and had no morals. Poor old people asking 5 grand for a car and letting some slime ball talk them down to one grand because he convinses them that the engine/tranny/etc.. is about gone.
Then, after fixing the car, you need to reverse the slime as far as selling it.
If you have those traits, you could actually do alright. If your like me and not a salesman, you probably won't do very good, other then paying for keeping a hobby going!
Oh please. A car that isn't running but needs a $500 dollar repair is worth about $200, even if after the $500 repair its worth $5000. Nothing slimy about it. In buying your non-running car I'm taking the risk.
Do you think a contractor is "slimy" for buying a rundown home, putting new roof, floors, kitchen and paint in, and selling at a profit?
Totally depends on where you live. In Florida I know a guy that buys "old lady cars" and resells them on Craigslist. Old lady dies/loses license he buys the car for a couple thousand and cleans them up and sells them retail. His favorite trick, new tires/new battery and combined with usually low miles means the car is ready for some miles! He tends to "ad lib' a story so it makes the deal sound so much better. Loves to leave goofy crap on the car, grandma license plate like: Grandma loves cats type stuff for effect.
He started doing it for his kids, bought cars from old people for his young kids. They drove the weirdest stuff from Suburu station wagons to Volvo sedans.
In my zip code, beater hand-me-down Subarus and old Volvos are everywhere. My mom drove Subaru wagons from the 1975 Arab oil embargo onwards. Until 2010, I didn't fit in them but I drive a current generation 6-cylinder Outback these days. My girlfriend drives an S80 and has never owned anything but a European sedan. There are plenty of old Swedish bricks driving around.
I have a friend who used to restore Volvo Amazon sedans and wagons. A lot of them just needed a carb rebuild and a tune up. If it was worse than that, it became a donor car.
Whatever you do, don't let them have the car until you have full payment in hand. Letting people pay out a used car
is not a good idea.
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