[2023] A DIY Guide to Making Money Flipping Cars for a Profit

Updated: Jul 18

Some side hustles, like taking surveys online, can get monotonous and boring to some of us over a period of time. But others, like flipping things or starting a microbusiness, give hustlers more autonomy to be creative and have different experiences each day that they work.

One such idea that currently interests me is flipping cars.

Luckily, over the past couple of years, a close friend of mine has really turned me on the process. So, today I'm back to answer the question: is flipping cars worth it?

Let's find out!

What does it mean to flip a car?

Flipping a car is the process of buying a car at one price and then selling it for a higher price. Doing so will lead to the buyer making a profit, particularly if you were able to buy a car for below its typical market value.

In some instances, flippers may opt to conduct some repairs of maintenance on the car in order to increase its value further prior to selling it, though this is typically only worth it if you're able to add more value to the car than the price of the materials you buy in order to do so.

Skills needed to become a car flipper

The automotive industry is not one where you want to just jump in and try your luck. In fact, doing so may lead to a loss of your investment, and pretty quickly. Luckily, in the case of my friend, you can acquire the skills needed to master car flipping.

To start off, you'll need:

Knowledge of the industry: When I first started talking to my friend about the practice, I was clueless about the automotive industry. And while I still have plenty more to learn, shadowing someone who has successfully flipped cars in the past can be an excellent start.

Excellent negotiation skills: Just like any other type of flipping, your ultimate profit margin depends on just three factors: the price you pay for the car, the value of work/parts you put into it, and the sale price of the car. By acquiring cars at as low a price point as possible, you'll leave more room for potential profit.

An understanding of repairs: Just like your primary vehicle, it is always possible that something will go wrong with your prospective flip prior to you selling it. The battery may need to be replaced, the spark plugs could fail, and the alternator may be bad. No matter what the issue is, if you're comfortable doing projects like this yourself, you may be able to weather the unexpected and still turn a profit.

How to acquire these skills

Acquiring these skills is paramount to be successful. So, if you don't already feel knowledgeable about the industry in your area or comfortable with the idea of handling your own maintenance, you'll want to work on this.

To do so, you may start browsing sites like Craigslist and Facebook Marketplace to look for cars for sale in your area. I recommend that you then google the cars you see listed for sale to understand what the average price point is for these vehicles elsewhere. Doing so will help you build a range of acceptable price points.

You don't need to memorize this or anything, but rather get in the habit of doing homework each time you see a listing. Remember to account for different special features, though, that could impact a car's pricing.

Honestly, my best recommendation on the potential repair side is to learn as much as you can by conducting work on your personal vehicle as issues arise. If you don't feel comfortable doing the work yourself, maybe you have a knowledgeable friend or family member that can show you the ropes, like I do.

Besides my friend, my father-in-law is very handy with vehicles, and can complete most all repairs himself, even relatively complicated ones.

Legal requirements and dealer licenses

There are a couple regulations and laws that you'll need to abide by as you enter the world of flipping. The most consequential, though, is determining whether you need a dealer license to lawfully operate within your state of residence.

Dealer licenses

In many states, if you plan on selling more than a certain amount of vehicles per year, you're technically required to get licensed as a dealer. This process will require you to pay multiple fees, including:

License costs
A surety bond
Other miscellaneous processing fees

And it can be pretty pricy to do so. In Connecticut, where I live, a two-year license costs $2,300, and skirting the requirements of a license is actually a Class C misdemeanor.

This doesn't mean that you need to register as a dealer prior to flipping your first car (in most states), but rather it is something to keep in mind if you start selling more vehicles than you intended to at the onset of your flipping journey.

Make sure you reference the exact laws in your state, however.

You'll also want to be careful to not become a nuisance to your neighbors with your endeavors. This means that you'll want to think closely about the logistics of your operation and avoid doing things like parking ten vehicles on the front lawn.

How to flip a car

With all of this in mind, flipping cars is not inherently a difficult process. In fact, you can flip a vehicle in just six basic steps:

Research to find cars for sale in your area
Evaluate a prospective flip
Negotiate and buy
Complete repairs if necessary
Market your vehicle for sale
Sell and collect your profit

Keep reading for more details on each of these six steps!

1. Research to find cars for sale

Before you can flip cars, you'll need to acquire them. Luckily, there have never been more ways to find prospective cars to buy online than there are here in 2023. Among your best options include:

Craigslist

Craigslist has for years been a place to find used cars for sale in your area. In my past experience, it tends to be a platform that has lots of highly motivated sellers on it, meaning that you may be able to find some good deals online. Of course, as is the risk with most online platforms in 2023, always vet potential sellers, watch out for scams, and tread with caution.

Facebook Marketplace

Facebook Marketplace is another platform where you are likely to find a large volume of potential cars to flip. Personally, I like the platform more than Craigslist because it is easier to vet sellers, since listings are tied to a seller's personal Facebook account.

If you find a car you're interested in, it is easy to reach out for more information. And depending on how your interaction goes, you may be able to set up a time to go see the car with your own eyes. If you receive pushback about setting up an appointment, that can be a huge red flag and a sign that a seller is trying to hide something.

eBay Motors

I'll admit that before my friend introduced me to the platform, I had no idea what eBay Motors was. The best way I can describe it here is as a place where car junkies can buy/sell cars, auto parts, and connect with other car enthusiasts across the country.

Just like "regular" eBay, eBay Motors is highly regulated and can help protect you from falling victim to scams that other platforms may not be able to identify.

Of course, nothing says that you need to source your vehicles online. Sometimes, you'll be able to identify opportunities just by driving around your town. It is common to see vehicles parked at the end of somebody's driveway with a sign posted in the window or windshield with a price and phone number posted on it.

If this is the case, jot down the phone number and do some research to see if you may have found a good deal.

2. Evaluate a prospective flip

Once you identify a vehicle that is of interest to you, your next step will be to see it in person. And while it can be a little awkward, you absolutely have a right to do your inspection.

Examining the interior

It is a good idea to check out the inside of the vehicle before you buy it. Most of the damage you want to look for here is cosmetic by nature, like stains/damage to the car's:

Floor
Fabric/leather seats
Seatbelts
Center console
Dashboard
Display

Of these features, broken seatbelts will be the biggest deal here, since they are a critical safety feature. Ultimately, your goal is to check for defects and harder to fix items, rather than a dirty or littered interior, which can be easily vacuumed out, for instance.

Examining the exterior

Additionally, I recommend that you do a thorough walk around the car to look at the exterior of your potential flip. This means looking at things like:

The quality of the paint
Any scratches, stains, or blemishes
Any dents or signs that a car was in an accident
The condition of the tires and hubcaps
Working headlights/brake lights

Of course, some sellers may push back if you ask to turn the vehicle on here. If they are transparent, though, and mention any broken headlights or brake lights, these can be really easy and affordable fixes, depending on the make and model of the car.

Check under the car's hood

One more place where you will want to be sure to check is under the hood. Depending on the type of sale that, you may or may not have time to do a thorough inspection, but this is where some automotive expertise comes into play.

You don't necessarily need to worry about basic things like air filters and whether the car needs an oil change, but you should try to get as clear a picture as possible of the car's:

Radiator and house
Brakes
Transmission
Belts

3. Negotiate and buy

After you've gotten the information you need to feel comfortable proceeding, it is time to enter the negotiation phase. Given what you've learned from your inspection, you should set a maximum price and budget that makes you feel comfortable.

Setting a budget

To set a budget and maximum price point you're willing to pay, you need to know what the vehicle is inherently worth. Resources like the Kelley Blue Book and Edmunds can be a great resource to help you get started here.

Once you understand the fair market value, you can decide what a fair offer is, given the amount of work that needs to be done to get the car back to a good state.

Negotiations

In many cases, you will be able to negotiate in order to try to buy the car for less than the asking price.

If you've identified any issues with the car, this can be your leverage to secure a lower price point. If the seller refuses to budge, it is okay to move on, particularly if you don't see a path to turning a profit anyway.

In general, though, you'll want to be prepared to meet the seller halfway or so in price.

Close the deal

With an agreed upon price, it is time to close the deal. My friend that flips cars always asks sellers to sign a contract that outlines:

The sale price and date of the agreement
The vehicle identification number (VIN)
Any other conditions that were agreed upon

It can be a good idea to have the contract notarized by a notary too.

This way, if something were to go awry when you try to pick the car up, you have some documentation should you need to litigate.

4. Tackle repairs if necessary

Now that your target vehicle to flip is officially yours, it is time to tackle any repairs that you outlined when you inspected the car prior to buying it.

5. Market your vehicle for sale

With your repairs in the rearview mirror (no pun intended), you can now market your vehicle for sale.

You can use the same platforms we discussed earlier, like Facebook Marketplace, eBay, or Craigslist, or you can strive for a more local sale in your immediate area.

While showing the car to potential buyers, I recommend that you be completely transparent. Let them see the interior, exterior, under the hood, and even let them see the engine running.

6. Flip the car and collect your profit

Eventually, your marketing efforts will pay off and you will find a buyer for your car. This will be the like the buying process, but in reverse. You may still opt to have the buyer sign a contract for your records.

At this point, all that is left for you to do is to collect your payment and move forward towards your next sale!

How much money can you make flipping cars?

The amount of money that you can make flipping cars depends on the type of vehicles that you flip, the amount you pay for each vehicle, and the extent of repairs and maintenance you may need to conduct before you are ready to sell it.

In general, however, you can expect to profit different amounts for cars priced in different ranges. For cheaper cars, those priced around $1,000-$2,000, you may be able to make $500-$750 or so, but this is all highly dependent on a number of variables.

Keep in mind that, while higher priced vehicles may present an opportunity to make more money, they also carry higher risk. This is something that you'll need to take into account.

Pros and cons to car flipping

There are a number of pros and cons to consider as you decide whether or not car flipping is for you. Among the best parts of the process include:

The ability to make good money: Those that know "the game" can make some good money doing so. If you're knowledgeable and able to handle 20 flips per year, you may be able to earn $30,000 - or more - per year in income above and beyond that of your day job.

Working on a passion: There are plenty of Americans across the country that have a passion for cars. The potential to make good money while following this passion is very attractive for so many.

Flexible hours: Though there are cars for sale every day of the year in your area, car flipping is truly one of those side hustles where you can work when you want to and step back when you don't want to. You don't want to sit on a bunch of unsold inventory in case the market shifts, but assuming you're working on one flip at a time, you absolutely can be flexible with your time commitment.

However, flipping cars may not be the best option for you if the following cons are deal-breakers for you:

Potential legal requirements: Remember that, to make really good money, you may need to get licensed as a dealer in your state. If this process scares you or you are unwilling to comply, then this may not be the side hustle for you.

Competition: Like just about any other field where there is the potential to make good, if not great, money, you'll find the process of buying and selling cars highly competitive at times. The key is to maintain as steady as possible. There will be times when you identify a great car, only to be outbid or beat to the deal by somebody else, for example. This is all part of the process.

Conclusion

Flipping cars can absolutely be a great way to make money on the side, but the road does carry some sizable risk for those that aren't sure what to do. Now, I want to hear from you. Have you successfully flipped cars in the past, or are you interested in starting in the future?

Tell me in the comments below!

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