IS there a target demographic that is better? For instance, go for first-time buyers and slant towards something sporty, or going off to college present for daughters and slant towards something cute and reliable? Or maybe work vehicles, winter vehicles, old lady vehicles...
My personal rule is I only buy something I won't mind driving. This has nothing to do with maximizing profit, but I don't like to work on cars I don't think are cool.
What % profit are some of you averaging on your deals? If you can turn the cars quickly for 50% profit or more, that could be a nice revenue stream for a side gig/hobby
oldopelguy wrote: Speaking of business, better check how many cars you can sell before you need a dealer license. Here it's 5/yr, which means at $500-1000 per car it's just a hobby and you have to be doing it for fun. If you were dreaming of quitting your day job either explore the dealership or plan on cars with real return.
Yeah, that's a problem I'd have here as well, though I think the limit is 20 cars. And the requirements for getting a dealer's license to sell more than that are a pretty high bar to clear (lots of insurance, must have an office/showroom and a lot).
STM317 wrote: What % profit are some of you averaging on your deals? If you can turn the cars quickly for 50% profit or more, that could be a nice revenue stream for a side gig/hobby
I can usually do double or better. Sometimes thats a quick wash, wax, clay-bar and flip, sometimes thats buy it, deive it for a few uears and double my money.
I once picked up an NA miata for 2000. Drove it for three years, did front brakes and a timing belt and sold it for 4200.
Edit: I also painted the wheels.
I'm pretty sure that technically you need a dealer's license in all 50 states to flip cars, even only 1 per year.
Many states have related laws that people misinterpret to allow a certain limit. For example, in GA the law says that selling 5 or more cars per year shall be evidence that the person is in the business of selling cars. Note, that DOES NOT say you are NOT in the business of selling cars if you only flip 1 car. People wrongly interpret this to mean that you are OK if you only sell less than 5.
Bottom line- states want their licensing fees, and they want people in the business of selling cars to be collecting and submitting sales tax, offering appropriate warranties, disclosures, etc.
If you buy a car with intent to sell, you are in the business of selling cars. You need to pay income tax on that money, and applicable fees and licenses.
Will you get caught? Probably not. But it is wise to understand the rules.
I will also say that if you do get a dealer's license, it typically means that you have to sell X number of cars per month or year to keep it, as well.
The title issue/ # of cars you can flip a year is what has kept me from doing this.
Kinda sucks because it would have worked out a good number of times and because my nights are generally free.
Just buy them for your personal usage, then get tired of them real quick. 
The way they make the rules for dealership licenses (in my state) makes it a pretty steep prospect if you wanted to try and go legit. Have to have a lot, signage, landline phone (NOT cellphone), insurance, and a must be open a minimum of 12 hours a week, with 8 hours occurring during week days. ect.
It makes it so it pretty much has to be your fulltime gig, since you end up with a lot of overhead with the lot, taxes on it, electricity, phone line, and you'd want highspeed internet there also, so add that. I wish there was a middle ground for people like us that want to do this as a hobby and still stay legal but at this point there is not.
You can check out these posts for inspiration though if you want to try your luck.
SVreX wrote: If you buy a car with intent to sell, you are in the business of selling cars. You need to pay income tax on that money, and applicable fees and licenses.
I can't believe this is the rule. When have you ever bought a car WITHOUT an intent of selling it? That would mean that every car you buy you plan on keeping for life. Do your heirs have to keep it too? 99.9% of people technically buy cars with the intent of selling it. Whether it be in 1 month, 1 year, 1 decade or longer. I think you're over-interpreting the law.
dyintorace wrote:SVreX wrote: If you buy a car with intent to sell, you are in the business of selling cars. You need to pay income tax on that money, and applicable fees and licenses.I can't believe this is the rule. When have you ever bought a car WITHOUT an intent of selling it? That would mean that every car you buy you plan on keeping for life. Do your heirs have to keep it too? 99.9% of people technically buy cars with the intent of selling it. Whether it be in 1 month, 1 year, 1 decade or longer. I think you're over-interpreting the law.
Maybe I worded that badly.
I didn't mean to suggest it was a rule anywhere. It's not. It was my shorthand attempt at communicating.
If you buy a vehicle that you do not intend to use for your personal use, but rather for the purpose of reselling, you are in the business of selling that car. You should treat it like a business, including applicable fees and licenses. And yes, income tax is definitely due on the proceeds.
There isn't any requirement to keep it. Yes, sometimes people change their minds. But if you are doing it for profit (which is the nature of what flipping cars IS), then it's a business. Perhaps a startup business, but still a business. You can CLAIM you intended to keep it, but you are not being honest.
I'm not all that stressed on the limit thing. I could buy/sell 5 cars, my wife could buy/sell 5 cars, my mom may buy a couple, I also have property in a couple of different states...
In reply to oldtin:
And you should be treating them all like a business.
In reply to dyintorace:
Well...me. I keep cars as long as I can. Unless you count scrapping them as intent to sell.
You make you money on the purchase not the sale of a car.
If you screw up on #1 cut your losses as soon as possible and sell to get cash back in hand to purchase another car to make money with.
I also have a rule of three when purchasing a car to flip. There are three things you need to look at when purchasing a car.
1 Exterior
2 Interior
3 Mechanical
You can have two of the three that need fixing and you may make some money but it will be work. If one of the three needs fixing it is usually easy money. If three of the three need fixing it will almost always be a looser.
I also finally figured out that if I think I'm going to flip a car, I should make sure it has decent tires when I buy it. Its hard to put new rubber on any car for less than $450, and that can be a big chunk of the profit for cars in the $2500-3500 range. I wouldn't feel comfortable selling an appliance type car to a kid or a family struggling to get the $ together if I knew the tires were way out there, and lets face it that is who the target market is for this kind of deal. (Enthusiast type cars are different, to a point.)
ManhattanM (fka NY535iManual) wrote: I also finally figured out that if I think I'm going to flip a car, I should make sure it has decent tires when I buy it. Its hard to put new rubber on any car for less than $450, and that can be a big chunk of the profit for cars in the $2500-3500 range. I wouldn't feel comfortable selling an appliance type car to a kid or a family struggling to get the $ together if I knew the tires were way out there, and lets face it that is who the target market is for this kind of deal. (Enthusiast type cars are different, to a point.)
It can be difficult to put new rubber on cars, but I've usually had good luck with finding good wheels & tires for relatively cheap to swap on. I got a nice set of alloy wheels with fairly good tires on them for $125 when I needed new tires for the Jeep. It's not always the case, but if it's vehicle that uses a more common lug pattern I'll check and see if I can find solid take-off wheels/tires.
Another reason I love owning a tire mounter and balancer. How'd I get by without them?
crxmike wrote: Another reason I love owning a tire mounter and balancer. How'd I get by without them?
I've given at least the mounter serious thought. If I am able to find a cheap set of R16 snow tires for the Jeep I will almost certainly pick up the HF mounter- the $50 or so it costs would be gotten back almost immediately in the savings on having the tires put on the original Jeep rims...
$50 tire mounter??
In reply to SVreX:
I was curious too. Found This When I went looking. It might pair well with this balancer too.
STM317 wrote: In reply to SVreX: I was curious too. Found This When I went looking. It might pair well with this balancer too.
Yup, that's what I was referring to. One of the other GRMers who has the mounter has said that it works reasonably well, but that it can scratch up softer metal rims (like aluminum) but works well for steel wheels.
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