Flipping Cars: How to Make $1000 ++ on the Side

Updated on January 19, 2020
JerryFisher profile image

In his years flipping cars, Jerry Fisher has learned what makes a car valuable and what to look for.

Car auctions are good places to buy used cars that you can flip for profit.
Car auctions are good places to buy used cars that you can flip for profit.

Flipping Cars for a Living

Many people have created a home-based business buying and selling cars. You don't need a huge capital outlay to start this business, or even great mechanical knowledge (although naturally, this would give you an advantage).

In this article, I'll talk about:

  • Where to look for cheap cars to buy
  • How to check out a car's mechanical condition
  • Frequently asked questions about flipping cars
  • How to detail cars yourself and prepare them for sale

Source

Places Where You Can Buy a Cheap Car

Buying a cheap car is actually fairly easy. Look for cars in these places:

  • Local car auctions
  • Craigslist
  • eBay
  • Newspaper classified ads
  • Supermarket community boards
  • Private cars parked on the side of the road with a "For Sale" sticker on them.

What to Look for at Car Auctions

Car auctions are my favorite place to find cars, as they are fast and the cars can be very cheap. They also often offer repossessions or dealer trade-ins.

At car auctions I pay special attention to dirty-looking cars. Everyone avoids a dirty car because they think it's an old wreck. It might be, but it could also have belonged to an older person who left it outside under the trees and couldn't be bothered to clean it.

I bought a six-year-old Honda a few months ago for $250 at auction. I was the only bidder even though there were a hundred potential bidders in the room. The Honda was sitting amongst the other cars, but had a flat rear tire and its dark blue paint looked incredibly dull, flat, and tired.

When I opened the passenger door, the inside was full of old McDonald's wrappers and a ton of other rubbish. At least there wasn't any bad smell. It turned out to be a repossession. The dealer must have taken one look at it and been so disgusted that he sent it straight to the auction.

I started the car up and went through my checklist (see below). I couldn't find any fault with it. I couldn't drive it away because of the flat tire, but I knew that if I could get this car cheap enough, it was going to turn a great profit. One final check was wetting one of my fingers and running it across the paint. The shine came back.

So, I got the car towed to my garage at home and got to work. I changed the tire. Then, I cleaned and vacuumed the interior thoroughly.

I then started on the outside, which I had to buff and polish. Then I cleaned the engine, door jambs, trunk, rims, and tires. I had a fantastic-looking car.

Hondas of this age sell for between $7,000 and $8,000. I can never be bothered to hold out for the higher end of the range, so I sold it quickly for $6,500 by advertising in our local newspaper.

A middle-aged couple bought it and were totally happy. They wanted a Honda for its safety record and reliability. Frankly I didn't really care. I just wanted to move on to the next car.

How to Negotiate When Buying From Individuals Through Craigslist, eBay, and Newspapers

Some great buys can be had from all of these sources. My preference is local newspapers and supermarket boards, because I can easily contact the seller and start negotiating.

Buying a cheap car through these sources requires a little luck and a little pushiness. If you don't like the idea of confronting and negotiating with someone, then stick with car auctions. But face-to-face negotiations give you information you can use. It's easy, once you've met the seller face-to-face, to work out the reason for the sale. Are they elderly and can't drive it any longer? Do they need the money? If so, it's possible there is nothing major wrong with the car.

I very rarely buy on the spot unless it's a bargain. What I tend to do is go away and say I'll think about it. I leave my number with them and hope they'll call me first and then I'll know their desperation level.

If I don't hear back from them, I call back three days later. If the car's gone, I don't care. Rule one here is don't get emotionally involved. Remember you don't want a car. You want to make money, and a car is just a money-making tool.

But never let it slip during negotiations that you are a car flipper. If people suspect you're buying their car to sell at a profit, they'll make the sale as difficult as possible, no matter how desperate they are to sell.

Also remember that an elderly person or couple selling a car may have owned it since it was new. Remember that this car may have been their baby, their pride and joy. If it's been pampered, compliment them on its great condition and what great owners they must have been.

Don't tell such owners that you're buying the car for your daughter's graduation present or something like that. If they think a teenager is going to drive it, they may visualize its wheels being torn off. Better to say you're buying it for your mother who has done so many great things for you over the years and deserves something back.

After you've got them on your side, it will be easier going through the mechanical checklist below to find the odd unknown fault and start the process of getting the price down. For example, "Ah, Mr, Hannity, I'd love to buy your car, as you've kept it in such pristine condition, but I really don't like the sound of that light tapping noise on the top of the motor." (Tappets, by the way, are an easy cheap fix.) "I'm buying this as a gift for my mother so I just don't want her burdened with the expense of a major mechanical repair. Look I know you're asking $6500, which is a fair price for this year and mileage, but considering that tapping noise, I'd be prepared to offer you $5000 so I can get that that noise fixed properly myself before I give it to my mother. What do you say?"

Become a Specialist and an Expert

When I started out, I spent a lot of time studying at auctions to find out which cars created the most interest and got the best prices. I quickly learned that even though it was tempting to buy a Mercedes going for a song, other people were steering clear. The reason is that they perceive Mercedeses and other similar cars (Audi, BMW, Citroen, Renault, Peugeot) as very expensive to maintain and repair, and such cars are difficult to offload to a buyer. Actually, once you get more into car flipping, you'll find out how wrong this perception is. Most of these models cost no more than a Ford or a Honda to put back on the road, but I've still steered clear of them for resale, although I now drive a BMW myself and love it.

So stick to the types of cars you commonly see driving around on the road. I ended up concentrating on just five models of cars.

Become an expert on pricing the cars you plan to flip. Take notes at auctions of different models, mileage, years and accessories and get a list together to become an instant expert as to what's good value and what isn't.

Study prices on eBay and Craigslist. There's also Kelley's Blue Book which is an app you can download onto your phone and use instantly to price vehicles.

Learn About Car Repair

You don't have to know everything about what can go wrong mechanically. You will pick up this knowledge along the way. Plenty of books can help you with this, but Google and YouTube are even easier ways. Going online with the right search terms (for example: "how to remove a radiator from a Honda Accord") will quickly tell you if you are capable of doing the repair or not, what tools you'll need, and how much it's likely to cost. Also, on Google you can find enthusiastic car-guy forums that will give you prized information on any car issue that might need fixing, and even better how complicated and expensive it might be. You can find out before you even buy the car.

So, do your investigation based on what you know. Look for red flags. Below is a twelve-item checklist of potential mechanical issues you must investigate for any car you are thinking of buying. If your investigation reveals concerns you don't know how to resolve, you can walk away, or you can raise your concerns with the seller as a way of driving down the price.

Source

1. Check the Oil Level and the Exhaust

Find the dipstick and you'll find an indentation at the lower end of the stick showing the recommended oil level. The oil should reach the mark, but no drama if's not. It may just need a top up.

Next check the exhaust for oil blue-colored smoke. You will want the car to be warm to get a definite result, so maybe do this halfway through your test drive or at the end of it. Get the owner or a buddy to start the engine while you walk around to the back of the car and check the exhaust for oily blue smoke.

Blue smoke indicates a worn engine. It generally indicates there's not a lot you can do with the car. If you can get it very cheaply and you have a reason to think you can sell it for a lot, you may be able to replace the engine with a good secondhand or reconditioned one, but also remember that an engine replacement will make a new owner suspicious. So best to avoid this if you can. You could get the original engine reconditioned, but this runs the risk of being very expensive and revealing even more unexpected problems.

2. Check the Oil Color

The lighter, the better. Light-colored oil means a recent oil change, and suggests the owner services the car regularly. Ask him or her for service records. If he can't supply a good set of invoices you should be wary. It's just possible the car has a worn engine, and the owner has just changed the oil which will hide to an extent the "blue smoke" (see above) that comes from a bad engine. However fresh oil won't completely hide the smoke; just give the engine more hard revs during the exhaust test to see if blue smoke comes out.

3. Check the Radiator

Remove the cap and rev the engine. If the water bubbles up with air, it's got a blown head gasket. Also check the water color. Ideally it should contain a lot of green- or blue-colored coolant. Otherwise it should at least look like clear water. If it's a rusty color, that will mean radiator trouble at the least. You don't have to walk away at this point as radiators are not necessarily an expensive fix. But only stay involved if you can negotiate a really good price on the car from the owner (by saying the engine has a major problem) and you think it would be practical to change the radiator. In some models it's a nightmare to get the radiator in and out. Type the model into Google with "radiator problem" and look at a few forums to see how members have responded concerning the difficulty of changing a radiator out.

4. Check the Water Temperature

Let the car idle for ten minutes and check the water temperature gauge on the dashboard. If it reaches the 3/4 mark, you need to check a few things (see below).

5. Check the Water Hoses and Engine Belts

If they need replacing, ask the owner to deduct that cost from the sale price.

6. Listen to the Engine for Stuttering or Ticking

Ideally there shouldn't be any loud ticking or stuttering. If there is, you will want to decide what to do about it.

Turn the engine on and have a listen to the motor while it's idling. There shouldn't be any loud ticking noises. Get someone to rev it up halfway and listen again. Make sure it runs on all cylinders while being revved.

If it stutters on the way up while being revved, it could mean that one of the spark plugs or spark plug leads (or these days, ignition coils) is failing. This isn't necessarily a bad sign. It may be that the owner is selling the car cheaply because he thinks the problem is worse than it is. If you are keen on the car, get a mechanic at this point to check the problem out. Coils are less than $100 each and it's likely you will only need one.

Ticking, depending on where it is coming from, indicate a tappet noise, which is something that you may be able to address. If the owner seems not very mechanically inclined, you can argue that a ticking engine is dodgy, when actually it may not be.

Get a large screwdriver about 18" long (carry one in your test drive kit) and use it like a stethoscope to try to locate the source of the ticking. When the engine is running, place the tip of the screwdriver on top of the engine—be careful to keep it well away from any turning blades or belts!—and put the other end to your ear. The ticking will sound a lot more pronounced. And this test looks very impressive to a bewildered owner.

If the ticking is at the top of the engine then it's likely to be a tappet noise. Tappets are usually easily adjustable by a half-decent mechanic. But if the engine has a lot of miles on it, the tappets may not be adjustable, and the noise could mean the camshafts need to be reconditioned or replaced--and then it's expensive.

If the ticking is lower down in the engine, there is likely a piston issue. Walk away.

7. Look for Oil Leaks

Back up the car and look at the ground where it was just parked. Oil drips may mean an expensive repair—depending where they're coming from. If the top and middle of the engine are dry, the oil is most likely coming from a sump leak, which is very easy to repair with a new gasket. Oil leaking from high up in the engine may mean a bigger problem. In any case, a leak gives you an excuse to drive the price lower.

8. Check the Transmission

Transmission issues can be tremendously expensive and complicated. Look for any delay in going into Drive, and for a smooth transition from Reverse to Drive.

Here's a story that might make you think more about transmissions. I recently bought a Volvo T5 sight unseen from another city, through Craigslist, and far enough away that I had to get a transporter for delivery. Photos of the car were excellent, the service history was good, the owner seemed nice, and the price was ridiculously cheap because as he said, it was his wife's car and she had just had a stroke and couldn't drive it any longer.

The car arrived and I found a few little issues—he hadn't photographed the missing clear coat on the roof, which looked pretty ugly, and it was messier inside than what the photos had shown. But that was all fine with me, as I often buy cars in that condition and can easily get them ready for sale.

But then when I took this car for a drive, it started well and drove well, but after half an hour I got into a bit of traffic and suddenly the auto transmission had a life of its own. It crashed through the gears and just picked whatever gear it felt like. Once out of traffic it was fine, but clearly the car just wasn't saleable in that condition.

I got on the phone and yelled blue murder at this guy, but I knew by his attitude and by his distance from my place that my complaints would get nowhere and I would be stuck with this car.

There are some makes, like Volvos of this era, that share transmissions with other manufacturers. The transmissions are sealed for life and cannot be easily repaired. Looking online after this experience, I learned all about this Volvo transmission problem, and was comforted to know only a fraction of Volvos had it. I just struck an unlucky one.

I just had to suck this problem up and sell the car for what I paid for it. The way to do this is by auction. Cruel, I know, to pass the problem on to someone else but in this situation the auction is a great middleman. You don't come face to face with the buyer and there's no come back. The auction mechanics will test a car like this out but they only give them 5-minute test drives so are extremely unlikely to pick up on a problem like this.

So several lessons here:

  1. Don't buy a car sight unseen; if you can't check it out yourself, spend the money to have it checked. The checkout should last half and hour and cover everything above.
  2. Be wary when buying cars at auctions yourself. 90% of the time they'll be fine, but if you don't check out the car yourself or have a mechanic go over it, you could be stuck with something you don't want.

9. Test the Steering

On an open road, check for play in the steering wheel.

10. Test the Brakes

Be careful when you test them. Rember you don't know the car or its characteristics, so check the brakes gently at first, especially if you're on a wet road. Apply more and more pressure as you gain confidence with them. If after a heavy stop it feels as though it's going a little sideways, this could indicate worn pads—easy to replace—or perhaps a worn shock absorber—not too terribly expensive to replace.

Once again, calling attention to a car's shaky or precarious stop is a great way of driving the price down.

If you are flipping cars, it's a good idea to build up a good relationship with your local car dismantler. The more you buy from him, the better prices you will get, and you will also get better parts. Shock absorbers from low-mileage junked vehicles can be very cheap. Brake pads, on the other hand, are cheap enough new, and that's a part I wouldn't get from a car broker.

11. Look for Rust

Look under the car, and check the floor of the trunk, where water often collects. But also have a good look at the side sills, the long plates under the doors. Check for any signs that they might have been filled with fiberglass. One sign of a bad rust repair job is a scratchy finish (caused by a heavy grade of sandpaper) which has then been painted over.

If there's any sign of fiberglass filler on the sills, walk away. You can almost guarantee that this will be the tip of the iceberg for rust repairs, and if rust is being repaired with filler, it's going to be a bad job. Any good repairer will have replaced rusty panels completely instead of filling them, or fixed them by cutting out rusty patches and welding in a metal patch.

Rust can be your car's biggest problem. If it is in a visible area such as the sills, then it's going to likely in hidden places like suspension pick up mounts, where it is downright dangerous.

Look at the car's history to see how likely it is to have picked up rust. Dry areas like California are known for rust-free cars. But cars from areas like New York can get rusty, because they put salt on the road in winter to eat away at the snow, and the salt eats away at the cars too.

12. Find out the History of the Timing Belt

I've left this for last because in many ways it's the most important of all. A timing belt drives the camshaft(s). This is almost always true of Japanese cars of a certain age, though most large American-built cars have timing chains.

Timing chains are better than timing belts, because they almost never break and can be expected to last the life of the motor. However timing belts do break. Mechanics strongly recommend replacing them at about 60,000 miles. By this time they are quite worn and fragile. Not replacing them can result in them breaking and causing catastrophic engine damage. Replacing timing belts is a costly job because many other parts need to be moved around or replaced when replacing the belt.

Whether the timing belt has been replaced should be your number one question when buying a used vehicle. The answer should be supported by written evidence of when and by whom the replacement was done. If you're not satisfied with the answer, walk away. This is an engine item that even the mechanically uninitiated are now understanding. When you go to sell the car, you will most likely get the same question about the timing belt yourself, so you will want written evidence about the timing belt history.

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1. Do I Need a Dealer's License to Buy and Sell Cars?

In many U.S. states, the Department of Motor Vehicles allows individuals to buy and sell three cars a year. Find out if this is the case in your particular state.

There are two ways to get around such a restriction.

After you sell the first three cars in your name, ask a family member or good friend if you can buy and sell cars in their name. They should get part of the profit.

After you’ve bought and sold six or seven cars, then you’ll have a nice little business on your hands. I can tell you from my own experience that when you involve others, they’ll want a piece of the pie. If you started off offering your sister 20% of the profit, after she sees a few successful, easy sales go through, she may want 50%.

So, once you've sold six or seven cars and built up your confidence, become a licensed dealer.

This doesn’t cost a massive amount of money and is fairly straightforward. It gives you independence to operate freely and legally to buy and sell as many cars as you like throughout the year.

You can still operate from your home or wherever you like, and you don’t have any overhead like a general car dealer does. What you do is buy into a dealer organization on a Co-Op basis. It will cost you about $500 per month, but for that you get some real benefits. You get an LLC (Limited Liability Company) plus insurance (to help if your car is stolen or a prospective buyer crashes it). You also get a dealer plate; if you buy an unlicensed car, this plate gives you the right to legally travel on the road with it until registered. Plus you get an auction pass to attend Dealer-Only Auctions.

2. How Much Should I Spend on a Car I Plan to Sell?

The first time out, set yourself a budget of $1,000 to $1,500. Try to make a smaller profit of $500 to $1,000. This will give you lots of experience and will not be a huge risk.

If the deal starts looking unprofitable, due to a mechanical issue that your inspection didn't pick up, you should be able to at least get your money back, as long as you've bought the car cheaply enough.

3. Should I Insure a Car I Plan to Sell?

Yes, I always take out insurance. It might only be for a couple of weeks, so it won't be expensive. It's best to cover your asset. You just don't know what's around the corner. What if a test driver has an accident? Shop around for cheap insurance quotes.

4. How Do You Know if a Vehicle Has Been Stolen?

Go to the National Insurance Crime Bureau. You can check up to five vehicles a day here. Have the VIN number ready. This number is like the car's birth certificate. It was given to the car when it came off the assembly line and remains with the car until the day it dies.

Don't accept the owner's word for what the VIN is; check it yourself, physically, on the car.

You can find the VIN in the following places:

  • lower left corner of the dashboard, in front of the steering wheel
  • inside the driver-side doorjamb
  • in the rear wheel well directly above the tire
  • in the front of the car frame, near the container that holds windshield washer fluid
  • the front of the engine block
  • underneath the spare tire

5. How Do You Know if a Vehicle Has Been in a Bad Accident?

It's sometimes difficult to tell, but once you start knowing your cars you may be able to spot a few things:

  1. When you drive it on a straight road, the steering wheel should not be at an angle. If it is, the problem may be something that can be fixed with a simple wheel alignment (less than $100), or it may be that you don't want the car because it was in a crash and badly repaired, and no longer runs straight on the road. If you suspect this, you could have someone drive behind you and watch your wheels. If the damage was very bad they may see the front wheels poking out from in front of the back wheels while driving in a straight line.
  2. Another sign of a crash is poorly done repainting. Have a look at the top of the trunk and the hood. Check for paint with signs of "orange peeling." This looks exactly as described; it's paintwork that is dimpled like the skin of an orange and not a factory flat surface. It's possible the crash may just have been a low-speed supermarket parking lot accident and nothing to worry about. In any case, a good paint repairer will have that orange peel flattened out in no time.

You can use all your concerns about the car's history to drive the price down.

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How to Clean Your New Flipping Investment and Save Your First $300

So there it is in your driveway and chances are it's looking pretty shabby. Now here's where you can save a lot of money by cleaning and detailing this newly bought car yourself. You can take it off to a car detailer who'll charge you at least $300 to do the following, or you can do it yourself and save that money.

Let's presume it needs a thorough clean: top to bottom, inside and out.

Cleaning Supplies You Need

Go down to your closest car store that stocks car cleaning gear and buy the following:

  • Two 3-gallon buckets
  • A garden hose and end sprayer if you don't already have one
  • A large sponge
  • A bottle of car shampoo
  • A piece of genuine chamois for a drying cloth, or a synthetic one if they don't have the real thing
  • A couple of hard toothbrushes
  • A dish wash brush
  • A can of engine degreaser
  • A can of mag wheel cleaner
  • A can of window spray
  • Black tire spray
  • Can of matte black spray paint and masking tape
  • A mid-priced vacuum cleaner (if you don't have one already) complete with small nozzles to get into tight places.
  • A can of car polish
  • A can of cutting polish
  • A bag of rags
  • A can of vinyl cleaner

Once you have everything on the list you'll have all you need to totally clean a car. But generally you'll only need some of those items.

Source

Cleaning Your Car and Engine Inside and Out

Pick a cool or cloudy day to do this, or do it in a carport where the body of the car won't get too hot. Cleaning a hot car is hard work.

The engine. Open the bonnet when the engine is cold and give the entire motor a dousing of engine degreaser. Be really careful about this. It's an excellent way of making a motor look like new again, but some states are very firm about not having the degreaser leach into the storm water, so over to you if you want to do it or get caught. If you have thick oily grime in some places let the degreaser sit on those areas for a few minutes then get the garden hose sprayer and wash it off. If spots are still lingering then get a hard toothbrush, spray those areas again and start working away at them while the degreaser is still wet. Then completely wash all the degreaser off the engine.

The wheels and tires. Next get a bucket. Dedicate one bucket just to cleaning wheels only, and dedicate another bucket to just shampooing the body. You get a lot of grease and muck off the wheels which can get transposed to the body if you just use the one.

Fill the bucket halfway with clean water and a little car shampoo. Then get the mag wheel cleaner and thoroughly give the wheels and tires a good dousing. Let it rest to do its work for five minutes and come back with the bucket of soupy water and your dedicated hard brush for cleaning the wheels and tires. Give them all a huge scrub making sure you get to all the fiddly bits around the wheels. Keep adding fresh soapy water all the time to do this.

Next come back with the garden hose and with a good pressure spray all that soapy water off he wheels and tires. If they were dirty you'll be amazed the difference in color and look once they're washed.

The body. Get your "body" bucket, put a couple of capfuls of car shampoo in it, and fill the bucket about halfway with clear water. Pick up your sponge, dip it deep into the soapy water, and scrub the body down with the sponge. Start on the roof and work your way down.

Then thoroughly wash the body clean, with the garden hose sprayer, from the roof down. They'll likely be a lot of soap that's drifted into areas like roof gutters and hood and trunk seams, so thoroughly wash all that out until its gone.

A tip: Don't use a high-pressure cleaner on your car. Feel free to use it on a pickup or large SUV covered in grime and mud, but not your car. The pressure wash will look like it's taking a lot of mud off your car, but wait until it dries and there will still be a film of dirt there. Furthermore, pressure can force water through vulnerable areas like windows not quite shut, or sunroofs.

Now, pick up your chamois and thoroughly wet it and rinse it out with your hands. Drying the car off with the chamois is the most laborious job of all. There will be so much water on the car that you'll be rinsing that chamois a lot. To save time and energy, use the chamois first as a 'sweeper' to just sweep as much water off the body as you can before getting to the job of drying every drop off the car.

Polishing the paintwork. Take another look at that paintwork. Now that it has dried, does it look a little faded? Well that's where your car polish comes in. I prefer Turtle Wax but the other top brands (Mother's, McGuires) are all as good as each other.

Get a dry rag with a good dab of polish and run in up and down strokes on a piece of the faded paint. Then get another dry rag and polish that bit off. Does it look better or the same as the paint next to it? If it's better, then start doing the whole car. Take care around where doors shut, where the hood goes down, where the trunk closes, and around rubber parts. When the polish dries, it can get into all those areas and leave a white polish mark. Just go over it with a dry cloth and it will all come off.

Also, don't polish the car all in one go. Once the polish is dry it's difficult to get off, so, do one side of the roof, then polish off, then the other side, then do one complete door, then another, then half the hood, then the other side. This way it's much easier to take off and you'll get a better overall finish.

But! If you put the polish on an area and then take the polish off, and the result is no different from the faded paint next to it, then you're going to have to use the cutting polish first before your final polish.

This, believe me, is a real drag without an electric buffer but can be done. You're best applying the cutting polish with a wet cloth and putting it on in even smaller areas. So divide the hood up into four areas and cut the polish on one quarter, then use a dry cloth to polish off, then do the next quarter, and so on. You'll find that the areas that have been in the sun the most-—the roof, trunk and hood—will be the worst. The sides are unlikely to even need cutting polish.

The interior. Get inside and give the seats and carpets a thorough vacuum. Remember to wind the seats back fully in both directions to get underneath them properly.

While you're inside, get the window spray and clean the windows. Don't let the spray dry on the window or it will make it hazy. So spray then immediately and wipe them off until they are dry and clean. Clean all the windows on the inside, remembering all the side ones too.

Then get the vinyl spray, spray it over areas like the dashboard, and wipe it off.

Hidden spots. One last job: Open all the doors, the trunk, and the hood. Polish all the exposed areas along the sides that will be dirty, including the door jambs.

Phew! You're done, and man I bet it looks good!

How To Buy and Sell Cars for a Profit: Make $2000 Per Week and Have Fun Doing It.
How To Buy and Sell Cars for a Profit: Make $2000 Per Week and Have Fun Doing It.

Great E-book here that goes into car flipping in a lot more depth. I found it useful. And it's only $1.80!

 

Good Luck!

So these are my tips for buying cheap cars and hopefully developing a nice home business from it.

Use the comment section if you've got any questions. Best of luck.

This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.

Questions & Answers

  • Do you title a purchased car in your name first? Or can you just give the buyer the original signed title you got from the auction?

    No, you should title it in your name if you want to create a long-term business.

  • I want to get a permit or license that will allow me to sell cars for profit, via advertising on Craigslist. Is there a license like that?

    You'd have to a get a dealers license, or, otherwise register them through family and friends. All states have different limits. For example in Texas you can only sell 5 a year. But have a look online for dealer licenses they're not that hard to get.

  • I’ve seen that sometimes in auctions the cars won’t have original wheels even if it’s a new model and low miles. Why is that? Do they sell them? Are there any other parts I should check to see if it is original that they remove for resale?

    That's likely just a personal choice of the past owner (wheels) nothing to worry about there. Yes, they're likely to have sold them or done a trade with the wheels dealer. No, if it's a fairly new car there shouldn't be any other swap outs. If it's a performance car it may have been "chipped" which means the computer has been tampered with to give it greater horsepower. Generally, the past owner is very proud of that and will advertise it as such. Stay clear of those cars. They're likely to have been thrashed.

  • Does the year matter when buying a vehicle?

    Not really. It's more condition and price.

  • Does it matter how many miles are on the car as long as it checks out fine with the things you listed in this article?

    The lower the mileage the better. When on-selling the mileage is one of the first questions you'll be asked.

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    • profile image

      T Clark 

      5 months ago

      Customer financing for purchase

    • profile image

      Handley Estate Sales 

      6 months ago

      This is such a great article. The tips that you share in this post are really awesome. I just love your post, because each and every point explained in detail. You’re doing a great job. Keep it up.

    • JerryFisher profile imageAUTHOR

      Jerry Fisher 

      6 months ago from Wellington

      Thanks and I agree completely Daniel.

    • profile image

      Daniel Lewis 

      6 months ago

      This type of information is helpful for everyone. Everyone should aware about them. This will give a better option to us.

    • profile image

      Fatima 

      8 months ago

      How or were can i get my license

    • profile image

      Juan Figueroa 

      8 months ago

      hi can i resell my car that i bought from auction direct to CarMax?

    • JerryFisher profile imageAUTHOR

      Jerry Fisher 

      8 months ago from Wellington

      Ebay or CraigsList.

    • profile image

      Rolando 

      8 months ago

      Where do you look for good second-hand parts?

    • profile image

      Alan castillo 

      8 months ago

      Thank you very much for the info you are the best !

    • JerryFisher profile imageAUTHOR

      Jerry Fisher 

      10 months ago from Wellington

      Great point Dvaughn. I absolutely agree. Should go to an auction without bidding at least six times to see what's going on and why first. Thanks for that advice which I've neglected to mention!

    • profile image

      Dvaughn2071 

      10 months ago

      Thanks Jerry. You gave some good advise here. One thing I would stress is to not get caught up in the bidding at an auction and make sure you understand that process. I've seen people bid alot more than they thought they were bidding.

    • JerryFisher profile imageAUTHOR

      Jerry Fisher 

      11 months ago from Wellington

      Amir unless you've got expertise in repairing them or have a relative/friend that you could do some kind of 50/50 arrangement with, I wouldn't go near them. Without experience they're expensive to repair and unless you know what you're looking at re the damage you might be buying a can of worms.

    • profile image

      Amir G 

      11 months ago

      Hello Jerry,

      Thank you for the very informative and thorough article. How do you feel about purchasing damaged vehicles from auctions? What would you consider and what would you avoid?

    • profile image

      Eric 

      15 months ago

      Thanks soo much Jerry. I've been planning to start this kind of business but my problem was concentrating much on buying from individuals. I love everything. The skill of avoiding competition when looking for a car at an auction, the checklist and advertising. I promise to inform you of my progress soon. Please leave space for advices when i need them. Thanks

    • profile image

      Edwin Ochieng 

      16 months ago

      I've seen in auctions some of the cars have more than 100km mileage what's the best mileage {kilometer}one should check if some one wants to buy a used car for re-sell

    • profile image

      Phil 

      20 months ago

      Thank you for sharing your experience

    • profile image

      shanayabindra 

      20 months ago

      Thank you for sharing the useful information. Keep up the good work. This blog is really interesting and gives rich details on buying cars cheaply and sell them at a profit. If you know more about the cheaper SUV visit https://autoportal.com/newcars/cars-between-5-lakh...

    • profile image

      fournals 

      20 months ago

      you have just answered all my questions, its now up to me to test this theory and see how it works in the real world by attending auctions to try and buy the cheapest car possible and working on it.

    • john000 profile image

      John R Wilsdon 

      21 months ago from Superior, Arizona

      Great hub. I love the checklist. It's very thorough. A few of the notes were new to me. You have got my juices up to attend a car auction. Off to see what is offered in my Arizona area. Thanks.

    • profile image

      PLUS INCOME TAX 

      21 months ago

      Nice! Great Job!!!

      Thanks.

    • JerryFisher profile imageAUTHOR

      Jerry Fisher 

      23 months ago from Wellington

      Good point Michael!

    • profile image

      Michael DeAngelo 

      23 months ago

      Jerry , did you mention check for prior collision or body work ? Carfax history report ?

    • profile image

      satinycakes 

      23 months ago

      What type of license is required to buy from an auction in Texas? And if buying from an auction does the requirement of a surety bond for license still something that has to be met. Example let say i just want to buy a car from the auction and sell it to someone after i fix it up and this would be my first car. What requirements would i have to meet in order to do something like that.

    • JerryFisher profile imageAUTHOR

      Jerry Fisher 

      24 months ago from Wellington

      Hi Roger, Best if you spent about 3 months observing the prices, taking notes, watching others and you'll soon see what's cheap and what isn't and what's popular and what isn't.

    • profile image

      Roger 

      24 months ago

      Hi Jerry.

      I've read your, article and found it very informative, I am calling from the Uk but the principle must work all over the world, Perhaps you can help, you said you could see the Volvo was cheap and there was a profit to be had. how would I go about knowing what was cheap and what was not in an auction and how would you go about this?

    • JerryFisher profile imageAUTHOR

      Jerry Fisher 

      24 months ago from Wellington

      Good luck

    • profile image

      Patricia 

      24 months ago

      AxleAddict..Sounds good. GUNNA Try this..

    • JerryFisher profile imageAUTHOR

      Jerry Fisher 

      2 years ago from Wellington

      Lot's of dealer auctions are open to the public as well, otherwise yes, you'll need a dealer license.

    • profile image

      dwight greene 

      2 years ago

      do i need a licence to buy from the auction ?

    • profile image

      JoeCal 

      2 years ago

      I was wondering why you have to put the title in your name and not leave it in the previous owners name if you plan on flipping the car. I believe it's called an open title, that's what dealers do. This way you don't have the expense of the title transfer and sales tax and the time it takes to transfer a title. If you buy from a dealer you can't do that but from a private sale you can. Then you don't have to worry about selling a certain amount of cars too. I'm not an expert but just like cars as a hobby and usually sell them within say a year of buying them without driving them very much. Most of the times I do a title transfer so I can get plates. I lost my job about 11 months ago and thought this would be a good way to make some extra money, since I like doing minor work on cars anyway. I usually end up losing money though because I invest to much or paid to much for them. I'm selling a car right now for quite a bit more than I paid for it, but it's a rare vehicle so I'll see if it works out.

    • profile image

      Ohlsone 

      2 years ago

      Great blog! very informative. this is the exact data which I was looking for. I was bit confuse regarding this and now got clear idea with your content. For more visit: http://bit.ly/2qy3fTL

    • JerryFisher profile imageAUTHOR

      Jerry Fisher 

      2 years ago from Wellington

      Yes and no. If I've got say three cars at any one time I park them near the house but only have the one I'm selling up my driveway. If they think you're flipping cars you'll lose their trust straight away.

    • JerryFisher profile imageAUTHOR

      Jerry Fisher 

      2 years ago from Wellington

      Jusdeep - I'd be looking for an everyday car to begin with. Something that a person uses just for transport and going from A to B with. Think about a Toyota Corolla or Honda Civic. Top mileage maybe 80k as long as it has a good service history.

    • JerryFisher profile imageAUTHOR

      Jerry Fisher 

      2 years ago from Wellington

      You'll have to hang on in there Yevgenly. Audi's are nice cars but not understood by your average buyer who trust Japanese cars better for going to A to B.

    • profile image

      Yevgeniy 

      2 years ago

      Hey Jerry,

      Bought a car to try to sell it at a profit- 1997 Audi with 9ok miles; however, after trying to advertise i am not getting much interest. Any suggestions? I did not overprice it comparing to other sellers. Thanks

    • profile image

      Shajithalakkal 

      2 years ago

      your tips is great

      0

    • JerryFisher profile imageAUTHOR

      Jerry Fisher 

      2 years ago from Wellington

      Hi Tony,

      Requirements vary from state to state. There's quite a lot to it. Check out this link it will answer all your questions:http://blog.suretysolutionsllc.com/suretynews/4-ea...

    • profile image

      Tony 

      2 years ago

      Hi Mr. Fisher. I have buying and selling cars in mind. My question is what type of information would the DMV want if you wanted to test and obtain a dealers license.

    • JerryFisher profile imageAUTHOR

      Jerry Fisher 

      2 years ago from Wellington

      I'm sorry I don't know anything about buying cars in Nigeria, or, how you could check if they're stolen.

    • JerryFisher profile imageAUTHOR

      Jerry Fisher 

      2 years ago from Wellington

      Dealers have to have a much greater margin than $1500. They'll have to more than likely offer a discount plus a guarantee so yes they will bypass what seems a great buy. But nothing wrong with you buying a Sebring for that money and adding say $800 for a fast sale.

    • profile image

      Yevegeniy 

      2 years ago

      Jeery, I went to a public/dealer auction just to see how the operation runs. I found it difficult to understand how could some cars that seemingly look good and arent so old would be selling for under 1000, and still in all the dealers were letting them go by. Why wouldnt they be jumping all over them? Example 2007 Chrysler sebring with 130K miles was being offered for less than a $1000. I checked on line and found that other dealers are selling for at least 2,500. Can you offer your insight, I am missing something here. Thanks

    • JerryFisher profile imageAUTHOR

      Jerry Fisher 

      2 years ago from Wellington

      Good luck Mark!

    • profile image

      Mark 

      2 years ago

      Great article! Thank you very much Jerry. I have been interested in doing this for a while because I like cars. Your article helped very much, really appreciated.

    • profile image

      Guty 

      2 years ago

      I will do this and become rich. Thanks

    • profile image

      Tre 

      2 years ago

      Hey, Jerry. It says you wrote a book on selling used cars, what's the name of the book. The article was really good, do we need more information than that?

    • JerryFisher profile imageAUTHOR

      Jerry Fisher 

      2 years ago from Wellington

      Hi Piet - Yes I treat it like any business and pay taxes. If you buy well and check thoroughly refunds are unnecessary. If it's a mechanical problem that's not serious I'll fix it. If it's serious, I'll refund but if it's just a change of mind - no refund.

    • profile image

      Piet Mokoena 

      2 years ago

      Great tips Jerry.

      Do you pay tax for your business? And how do you deal with people who request refunds because of not being satisfied after using you cars for a couple of days?

    • profile image

      Pete w 

      2 years ago

      Jerry, what is your advice on modified vehicles such as lowering, lifting, non original tail light covers, etc? In other words mods that are costly to reverse. Tnx

    • JerryFisher profile imageAUTHOR

      Jerry Fisher 

      2 years ago from Wellington

      Hi Yoko - best to go for more run of the mill popular cars than uncommon cars.

    • profile image

      yoko 

      2 years ago

      is there any particular make and model that i should be more lean towards to buy? What type of make and model sell the most, does that matter?

    • profile image

      Dhammike Edirisinghe 

      2 years ago

      Dear Mr. Jerry,

      Your article is very helpful for me to start my new business and thank you very much for educating me. And also this article gave me lot of encourage to start my business.

      Thanks Sir.

      Dhammike

    • profile image

      Burke 

      2 years ago

      very useful info. Some of the tips were no brainers but I did learn several new things so well done, thank you.

    • profile image

      Jorge 

      2 years ago

      Great tips, thank you.

    • profile image

      Joel Hall 

      3 years ago

      Risky, both financially and safety wise as a investment.

      I tend to buy cars for female friends or family members who are down on their luck. I am not rich enough to buy everyone a new car (I only like new cars) but I grew up poor on a farm and have very solid mechanical skills. I just bought my one female friend a 2008 Dodge Caliber for under $800 dollars (blew my mind). It had some major issues, one being the radiator leaked and it had failed emmisions. I spent about $2,000 fixing it up, doing most of the work myself on the weekends (the list of what I did to that car for $2,000 is impressive). I have to say, that thing drives like a champ. So for $2,800 dollars plus fees and title, I got her a great driving car, got rewarded myself (you know what I mean) and the relief of not having to drive over to her house and fix her old buster every other month. Year and a half and no problems.

    • profile image

      Anaedo Norbert 

      3 years ago

      I would like to buy in United state and sell in Nigeria because am based in Nigeria. I don't know how possible it will be for me to buy cars from US without coming there because I don't have a visa to the state?

    • profile image

      Hannah 

      3 years ago

      Hi Jerry!

      Do you have any tips regarding high mileage? Or experiences having to do with car fax reports? What's your opinion on auctions that are open to the public?

    • JerryFisher profile imageAUTHOR

      Jerry Fisher 

      3 years ago from Wellington

      Hi there - The first car I bought was off an estate. I was lucky that they didn't know the value of it but also had so much other stuff to sell that they didn't really care.

    • profile image

      Dahmari 

      3 years ago

      Hey Jerry, I was wondering where did you purchase first car? Or how did you go about finding you first car to flip? I know you said that actions are you favorite, but that's when you are licensed. I just decided to jump into this with about 7k. Trying to figure out my first move.

    • profile image

      Jerry Fisher 

      3 years ago

      Hi Roger,

      Basically I avoid trouble as much as I can so yes I do stay away from rebuilt cars but not necessarily high milage cars. Japanese cars can do a hefty milage if they're well looked after without problems, but I do stay away from high mileage city cars. Stop/start all the time just isn't good for a car.

      No you're quite right, you don't have to use a broker if you've got a GDN through autoincome but this is just if you're doing it part time to avoid their fees.

    • profile image

      RogerJensen 

      3 years ago

      Hi Jerry,

      Great article, thanks for the quality information. Just wondering:

      1) Is mileage a consideration for you, as in, do you tend to stay away from cars with really high mileage, or does it matter?

      2) Do you stay away from cars showing accidents on the Carfax, salvage cars, rebuilt titles, etc.?

      3) Lastly, Carlos asked about the GDN license, but isn't that what you would get by signing up with www.autoincome.com or the like? Is the broker option if you do not want to sign up to become a dealer and pay monthly, thereby paying a broker per car buy transaction? Or is a broker also necessary to use in addition to a service provider like autoincome.com ?

      Much thanks for your help. - Roger

    • ksjoseph profile image

      ksjoseph 

      3 years ago

      Hi Jerry,

      Great stuff here. I am looking to start my own dealership and would love to message you with some questions. Do you do private message or email? Thanks!

    • profile image

      Jerry Fisher 

      3 years ago

      No problem Brady - Best of luck. Jerry

    • profile image

      Brady 

      3 years ago

      Thank you so much Jerry I have been interested in this for a while. Your article helped so much!

    • profile image

      blythe 

      3 years ago

      you should make a guide like this for cannons

    • profile image

      Jerry Fisher 

      3 years ago

      Hi Kindall,

      Yes you should have the title in your name before selling.

    • profile image

      Jerry Fisher 

      3 years ago

      Hi Raj,

      Yes you should register the car in your current state.

    • profile image

      Kindall 

      3 years ago

      This may be a stupid question, do you have to get the title put into your name from auction before you sell it?

    • profile image

      Raj 

      3 years ago

      Hi Jerry,

      Awesome article, thanks for the share! I have a quick question. I recently bought an out of state car from an auction and have a 30 days temp tags on it but will be selling it within this period in my state. The title has my current state address; do I need to get the car registered in my current state and get the license plates or is it okay to sell the car without this process? Also, if I can bypass this process then how can I just pay taxes for my purchase?

    • profile image

      Jerry 

      3 years ago

      Thanks very much!

    • profile image

      Rj 

      3 years ago

      Awesome article. Thanks for the knowledge

    • profile image

      Jerry Fisher 

      3 years ago

      Hi Will - Just renew.

    • profile image

      Will 

      3 years ago

      You said you insure for a couple of weeks. What happens if you don't make the sale before then ?

    • profile image

      Jerry Fisher 

      3 years ago

      Yes that's basically correct. You can use a Broker though:

      http://www.copart.com/us/Services/Brokers?intcmp=f...

    • profile image

      Carlos 

      3 years ago

      Is it true you need a GDN to get into a car auction???

    • profile image

      Jerry Fisher 

      3 years ago

      Hi Jose,

      In the States under the DMV, or, Department of Motor Vehicles, the law is generally only three. You’d have to find out what it is in your particular State.

      But there’s two ways to get around this. The first, and this is definitely the way you’ll want to start is to sell your first three, then with either your mother or father or brother or sister or very good friend, buy and sell them under their name for part of the profit. Use this only as an intermediately step though. After you’ve bought and sold six or seven cars, then you’ll have a nice little business on your hands and I can tell you by my own experience that when you involve others, you’ll bring out the greed in anyone when they see you making money and relaxing in your new business they’ll want a piece of the pie. So, you might have started off offering 20% of the profit to your sister and then after she sees a few successful easy sales go through, she’ll want 50% for sure.

      So, just use the first six or seven cars to build your confidence up and get a handle on how all this works. Then become a Licensed Dealer.

      This doesn’t cost a massive amount of money and is fairly straight forward. It gives you independence to operate freely and legally buy and sell as many cars as you like throughout the year.

      So, you still operate from your home or wherever you like and you don’t need any overheads like a general Dealer does. What you do is buy into a dealer organization on a Co-Op basis. In fact there’s some real benefits. It will cost you about $500 per month, but for that you get an LLC (Limited Liability Company) plus insurance (that’s if your car is stolen, or, one of your test drive buyers crashes it). You also get a dealer plate (if you happened to buy an unlicensed car then this plate gives you the right to legally travel on the road with it until registered). Plus an auction pass. An auction pass is for the Dealer Only Auctions.

      You still have to pay as you normally would for title fees. It takes about two to three weeks to set up.

      The guys in charge of all this and we’ll get to them shortly organize all the paperwork overnight for the transaction and coordinate with the DMV but you will get charged $100 for this. They also file a 1099 on your behalf to the IRS, so they’re basically doing all your accountancy work for you too but each time you sell a car, make sure you keep 30% in a savings account for when that’s due with the IRS. On the other hand, if you have to spend any money on the car for repairs, tires, petrol, car detailing costs, you can claim all these expenses back against the profit you make.

      Here are a couple of programs on the net that offer this service:

      http://www.autoincome.com/

      http://www.easyautoservices.com/

      There are more if you take a look through Google but these are the two with the biggest reputation. Personally I use easyautoservices.com and haven’t had any issues. Autoincome.com is in a lot more States and has a big reputation for great customer (dealer) service. Over to you if you want to choose any other one but if you do I wouldn’t be choosing them because of a lower price. When you become an independent dealer you’ve got a whole lot of responsibilities suddenly with the IRS and just being legal, so I don’t mind paying the $500 each month and extra for the bookwork as I know that both these companies take that part very seriously on my behalf.

      I go to dealer auctions.

    • profile image

      Jose 

      3 years ago

      Hey jerry thanks for a great article i was wondering if you need a dealer's license for doing this? i am interested in doing the same for profit but i havent done it before. And what kind of auctions do you go to?

    • profile image

      Jerry Fisher 

      3 years ago

      Hi Karen,

      Yes, I always take out insurance. It might only be for a couple of weeks so it's not expensive. But best to cover your asset. You just don't know what's around the corner - could be your test pilot has an accident, or, the guys at your local garage. Shop around for cheap quotes.

    • profile image

      Karen 

      3 years ago

      Question???? When buying a car for selling purposes do I need to buy an insurance or how does it work???? Thank you

    • profile image

      Eric 

      3 years ago

      Hi, I was just wondering if you have a dealers license when doing this sort of thing? I'm interested in doing something similar, but I'm worried about all the legal processes and insurance adding up fast and eating my profits right up. Thanks for a good read!

    • profile image

      Jerry Fisher 

      3 years ago

      Hi Zach,

      I normally meet them in the evening or weekends. Just a convenient time for them. Once you get used to that checklist it will only take you about ten minutes at most to go through and a 15/20 minute drive will sort the rest out.

    • profile image

      Zach 

      3 years ago

      Where do you usually meet the person when going to look at the car? And how long does it take for you to check everything?

      Thanks

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