What Is Car Flipping?
Car flipping can be highly profitable—but it’s easy to lose money if you don’t know what you’re doing. Here’s a quick guide to getting started as a car flipper.
Written by Bonnie Stinson
Reviewed by Georgina Grant
Table of Contents
- What is car flipping?
- Why do people flip cars?
- What to know before flipping a car
- How to find a car to flip
- How to flip a car
Load full table of contents
Car flipping is when someone buys a car and resells it at a higher price, with or without improvements. It can be a clever way to make quick money—or a quick way to lose money.
You could earn around $1,000 in pure profit with a car flip, or possibly much more if you know how to buy and sell classic cars. The most important skill for a car flipper is performing thorough research. While mechanical skills are helpful, you can flip a car without getting your hands dirty under the hood.
Before you get lost in online auto auctions, here’s everything you need to know about car flipping. Remember to do your research, follow your state’s guidelines, and choose a niche. Good luck!
What is car flipping?
Car flipping is when someone buys a used car with the intention of re-selling it for a higher price.
Car flippers may find a vehicle for sale at an auto auction or on Craigslist. Then, they will either make improvements to the vehicle or simply re-list the vehicle at a higher price.
Some people even buy new cars that are highly in demand and then re-sell them later. Car manufacturers have gotten wise to this process, however. You might have to sign an agreement with the dealership that you won’t re-sell the car within 12 months of purchase. Some manufacturers state that the warranty will be canceled if the vehicle is resold within a year.
This process is usually done by private buyers, not dealerships. If the vehicle is in your name, you do not need a dealer license to flip cars. But if you want to turn this hobby into a full-time job, it might be wise to apply for a dealer license or partner with a dealership.
Be aware that there are special laws that apply to car flippers. Check your state’s regulations carefully before you attempt to become a car flipper.
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Why do people flip cars?
Flipping cars can be a lucrative side hustle—if you know what you’re doing. The full process of selling cars from first purchase to flip can be relatively fast, and it takes less capital to get started than many other businesses, such as real estate.
A seller with business smarts could simply take better photos of a vehicle in order to attract wealthier buyers. Another option is to list a vehicle in multiple places. This can be done without any car repair knowledge whatsoever.
A seller who is mechanically inclined can make improvements to the vehicle before re-listing the car at a higher price. For grease monkeys, this kind of DIY effort is a great way to earn money.
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What to know before flipping a car
Once you are certain that you’re not breaking any state laws, it’s important to do your research before purchasing your first car to flip.
Set a strict budget
Pull back before making bids beyond your budget. Otherwise, you risk cutting into your profit. Think about registration, taxes, and other fees, too. Some states charge higher taxes than others.
Know the resale value range for the vehicle
Do diligent research about the
retail value of a used car
. Some vehicles retain their value better, like Toyotas. An all-wheel-drive trim level might be far more desirable than a two-wheel-drive version. Ultimately, if you can’t make a profit that justifies your effort, don’t buy the car.Get as much information as possible
Order a vehicle history report and test drive the vehicle. Minor problems might be easy to fix, but an accident history could ruin your resale plans. Confirm that the title is clear and find out if there is a
lien on the car
.Embrace your niche
Many car flippers focus on a specific car style or make. You might be really skilled at finding and re-selling off-road vehicles. Perhaps your specialty is taking a standard Honda Civic and transforming it into a pseudo racecar that could be in the Fast & Furious franchise.
If you really love Nissan, Audi, BMW, Corvette, or some other brand, try seeking out these vehicles. Not only will you improve your mechanical expertise by focusing on one make but you’ll also grow more knowledgeable about the resale market specific to that type of vehicle.
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How to find a car to flip
Auto auctions are a great place to buy a car to flip. You could try to
buy a police-impounded vehicle
, too. At many auctions, you can see what’s in stock online. The benefit of online listings is that they can expedite your research process. The drawback is that you’ll face more competition for desirable vehicles. Local auto shops can be good sources, too. Building a relationship with a local garage could be an ongoing source of inventory. If the auto shop also has a dealer license, this could become a great partnership!
Reach out to companies about used vehicles. It may be possible to
buy damaged cars direct from insurance companies
. In some states, you need a salvage license to do this. You could also try to buy used rentals or fleet vehicles like Hertz used cars
.Classifieds, newspapers, Craigslist, eBay motors, and Facebook Marketplace are also good places to find a car to flip. Just remember that the more time you spend haggling and chasing down sellers, the less profit you’ll ultimately rake in.
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How to flip a car
Start by assessing the state of the vehicle
Before you bought the car, you should have already made a list of the basic repairs. Add any items you missed during your initial examination.
Source new parts and do the necessary repairs
You’ll save money by doing the work yourself, obviously, but it’s important to make sure that the work is done to a high standard. Otherwise, you could be affected by the
lemon law
.Get the vehicle inspected by a third party
This certification demonstrates to buyers that the vehicle is safe and ready to drive. It will help build trust and attract buyers.
Prepare the vehicle for listing
Clean that foggy headlight, detail the interior, and polish the exterior. Take high-quality, well-lit photos in an attractive setting that show the vehicle from a variety of angles. Write a compelling description of the vehicle that highlights any updates you made.
List and flip
Post the vehicle for sale at a higher price point, making sure that the new price tag reflects all the work you put into the car. Be communicative and honest with potential buyers.
Once you’re ready to hand over the keys,
transfer the title
and sign over the vehicle to its new owner. Remember to cancel your insurance when selling a car
.Congrats on your first car flip!
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Is flipping a car different from reselling a car?
Flipping is the same as reselling. Both processes involve buying a vehicle and then reselling it for profit. Flippers may perform less work before re-listing a vehicle for sale, but in essence, both flipping and reselling are the same.
Is car flipping worth it?
Car flipping can be worth your time if you’re willing to devote serious resources to the process. Only attempt to flip cars if you have the money to buy a car and the time to properly research and list vehicles. Profits could reach thousands of dollars per flip—but you could also lose thousands if you make a mistake. Be careful!
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