Flipping cars, appliances, and other assets.

[fastbo]

Another point to make is that with arbitrage, you're always trading for pennies. Unless you can scale it ridiculously, you'll always be capped by your time. Its trading dollars for hours.
Now if you were the guy trading 200 washers and dryers in one phone call and not physically picking it up and selling each one to customers... that's scale. So for example if you could wholesale 200 washers from one guy to another guy, or wholesale 50 at a time without physically getting involved, that's an ok arbitrage business, but at any time your supply could run out, or they could raise prices... you still don't have complete control over your business. Could you keep it up for 10 years? Is it something you could remove yourself from, scale up, and sell in a liquidity event? No... it's just quick cash, a quick fix...

Look at Sal with the Paint Brush Cover. He owns his own product. He controls supply. He controls price (to a point). He probably makes great margins compared to cost. That's a real scalable business. Would his business still be around in 10 years? Would he be able to sell his company for millions if he chose to? The answer's yes and yes.

Arbitrage is not real entrepreneurship (except for few large scale outliers, like 7 figure accounts). It'll pay the bills but it's just trading dollars for hours and there's a limit to how much one person can arbitrage in a day. Read both of MJ's books and learn what creates value. As he says... we don't live in a perfect world... therefore there's opportunity for improvement in every defect or imperfection.

I agree and this is why I am between a rock and a hard spot. I'd rather cruise through the next 20-40 years years but I have the opportunity of flipping 200 (insert brand name here) washers and dryers per day if I choose to. 1 phone call gets me as many as I want as often as I want. But I agree, most often you are at the mercy of what you can accidentally find on Craigslist. And then once you find it on Craigslist you have to set up a time to go look at it and maybe buy it or maybe you will pass on it which would mean now you are running in double time to find something else to flip. But this is why most people don't continue to do it for very long.

 

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[minivanman]

I could sell 200+ a day if I choose to. The supply will run out when the human race stops washing clothes. <<< The reader might see this answer different than it is meant. There is an endless amount here in the US from various different places. Will the business be around in 10 years? It depends if I decide to scale it. The only reason I'm physically involved now is because I want to be. June 8th I'm headed to Florida and it will run itself. Would I be able to sell it? Not only would I be able to sell it, if I chose to, I could sell an entire business plan to start an appliance business which I could be selling at the same time I'd be wholesaling and retailing these machines. And if I choose to scale this, I will add refrigerators and stoves. I understand what you are saying is true about most others but it's not true about me. I have the connections to do this..... I'm just not sure I want to. I'll be making a final decision on the trip. Pennies on the dollar is actually $20 wholesale x 200 a day. But quite honestly, 1000 a day could easily be had, it's already being done, just not by me. My calculator loves the idea but my grandson would much rather go 4 wheeling every day with me.

 

[gClaw]

Great thread and some really good responses by guys (or gals) who know what they're talking about.
Enjoyed reading all the responses, some very good input for the OP to hopefully find the answer he's looking for to make a good decision.
I'm by no means any expert but I've flipped everything from houses, cars, appliances, furniture, restaurant seating, lawn equipment, various household items from auction buys...etc.. for myself and on consignment.
I've sold probably a half dozen properties mostly online for private properties and small investment companies. Marketing is my background so I thrive on the challenge of getting the phone to ring if I have to rent an airplane with a banner behind it and fly around in circles for a couple hours (unconventional)-advertising whatever I'm trying to sell.
I'm by no means a mechanic and haven't done but 3 vehicles breaking even on one after driving it for 4 months, and marginal profits on the other two, but haven't lost $ on anything I've flipped. These were all vehicles valued under $7500 by the way. As RHL stated in an earlier post, 5 vehicles are what I'm allowed in my state per year w/out a license and I don't want any hassles from the authorities if some neighbor complains or some upset buyer when something major goes wrong 2 weeks later and raises hell he wants a refund or he's going to contact the Attorney General. So I stay away from vehicles unless it's a slam dunk.
Like a couple others mentioned, start with the $1500+ vehicles first. You'll spend some $100 on cleaning it up and maybe reconditioning it a little b4 you can move it.
What do you see a lot of people driving in your neck of the woods that you can get a good price on? Jeeps? Pickups? Minivans?

And specialize in a certain type of vehicle (4WD's, minivans, whatever you know something about)
I have a friend who specializes in nothing but Honda's. Nothing else. Doesn't matter how good of a deal he comes across on another vehicle he only deals in Honda's. That's what he knows. They have good resale value, economical and he has his reasons why he likes them.
He buys through the Phoenix car auction, private parties, dealer trade-in's. He has been doing it long enough now he has his little network of leads.
Makes 6-figures a year dealing in nothing but Honda's. But he didn't do that overnight. It took him several years to get to that point.
Trial and error too. Now he has a guy who does all his reconditioning for him, some gal who takes all the photos and lists it online for him for a fee and he hangs out by the pool all day, goes to different auctions if he wants, goes through the classifieds and calls people advertising to sell a Honda and goes to check it out etc. Works less than 10 hours a week doing it and does 6 figures so it's definitely possible to scale and be comfortable. But he paid his dues and it took time to get to that point. And he didn't give up.

I know another guy who specializes in nothing but used semi trucks in the $20k-$30k range and does the exact same thing as the guy dealing in nothing but Honda's. Specializes in Volvo's only. Hasn't been doing it as long as the Honda guy but he's still fine tuning his one-man business and does low six-figures as well w/ plans to open a small big truck lot by next year. 'Works' about 20-25 hours a week mostly in a sports bar all day with just his cell phone.

And I have another who buys/sells nothing but clean minivans because their affordable and people can spend $5000 cash and buy one w/out having to get financing he told me. He's semi-retired (has his dealer license as do the other 2 examples above) and he said he tries to flip a minivan a week and clear $1000 is all on every one. He has it down to a science now after doing it for 10 years to supplement his other businesses. He used to flip nothing but corvettes in his younger days for a good 20 years on and off. From his corvette flips it led him to other businesses, buying hotels/motels, janitorial businesses, dumpster rental business, Penske RV & truck rental dealership and about a dozen more. He told me his corvette flipping for years is what funded his other purchases. But he knows cars inside and out.

Don't know if this post added any value to this thread or helped the OP see the light at all but IMO I'd steer clear of the high end vehicle investments until you've mastered the low-end supply/demand vehicles first then gradually move up to the batmobile if that's what blows your hair back.

Good luck!

 

[safff]

I've flipped cars and I've retailed cars and like the people above have said there's a world of difference. Setting up a business model is a barrier but it also intrinsically builds in some advantages that you simply don't have access to flipping.. as well as a bucket load of risk and expenditure which you also don't have exposure to whilst flipping.. Trade accounts, Space, being able to sell cars without purchasing the stock, warranties, taxes, the list goes on. Flipping can help you bootstrap IF you know what you're doing. The amount you can loose is directly proportional to your strategy and amount you're playing with. I've made $5-10k on individual deals over the years, but it isn't scaleable or sustainable. Retail is a different kettle of fish altogether.

 

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[Flybye]

First, my apologies for resurrecting this thread.

There is little to no mention about used car dealerships on this forum which is exactly as mentioned here. Flipping cars but professionally and legally. As some have mentioned, it is illegal to flip x number of cars per year unless you have a dealership license. Ive actually already signed a lease to have a small warehouse based used car dealership, and I will be getting my dealership license soon.

I have an amazing mentor. My high school friend that has owned a car dealership for the past 5+years, and she is extremely successful with it. As some of you have mentioned, the real money is in the financing. At first I will only be selling cars in the $2k-$5k range to help build up my bank account to finally start offering financing. Even if I pickup a car that is less than perfect (which Im sure will be most of the time) I am mechanically oriented and am not afraid to fix small things myself. If I pickup a car with brake pads to the metal, I know I can replace the pads and rotor. I love cars and everything associated with them, and this won't be my first round selling cars.

Ive heard nothing but success stories with making money on cars and growing a dealership so as long as you know your cars and how to talk to people.

 

[minivanman]

Take care of your customers and you will be a huge success. That's one thing I've always done. Let's say you give a 30 day warranty on something and it has been 37 days when the customer brings it back with a broken door handle.... unless it's a huge expense, just fix it. I mean, don't fix it if it's been 137 days but you get the idea. Atleast give them free labor and a car wash at 37 days. Keep all of your customers names and send them a Christmas card. I'm about to give up 1 of my tricks that I never tell..... when my wife goes out of the country I get her to bring back some really cool Christmas cards. Females go CRAZY over these nice cards! You might be able to find some online but she gets some really nice ones from little mom & pop stores.

 

[Flybye]

Take care of your customers and you will be a huge success. That's one thing I've always done. Let's say you give a 30 day warranty on something and it has been 37 days when the customer brings it back with a broken door handle.... unless it's a huge expense, just fix it. I mean, don't fix it if it's been 137 days but you get the idea. Atleast give them free labor and a car wash at 37 days. Keep all of your customers names and send them a Christmas card. I'm about to give up 1 of my tricks that I never tell..... when my wife goes out of the country I get her to bring back some really cool Christmas cards. Females go CRAZY over these nice cards! You might be able to find some online but she gets some really nice ones from little mom & pop stores.

That IS a nice touch. Especially if you include a $10 gas gift card with that Christmas card as a thank you for being a customer.

 

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[GoldOne]

Hi Everyone,


I have never bought or sold anything for a profit, and I definitely do not want to go about doing so before doing a lot of research and asking around for advice.

I found a used, low-mileage (19,000 miles), 2012 BMW 335i with a Dealer Trade in Value (per Kelley Blue Book) of $24,000 to $27,000, and private party was even higher than that. If I can get it for $23,500 (very likely as I have been talking to the dealer selling it), would I be able to make a profit out of it? The car is in above-average condition. I checked the carfax, it has one owner, no accidents, and no issues with it. The interior looks almost new, and so does the exterior. I has been regularly serviced as well.

To summarize, these are my questions:

- Will I make a profit with these price points? Virginia taxes and tags are estimated to be $1,073
- Will I need to get a dealer license in Virginia if I'm just buying and selling one car at a time?
- Will I need to get tags for a car that I'm not intending to keep for very long?

I would greatly appreciate any advice anyone has. I've dreamed of investing for so long but never had the courage to do it. I don't have a ton of money so my margin for error and loss is pretty low, but I can afford some loss.


Thank you!

Sounds a bit high for your first flip, I used to do motorcycles on craigslist and would pay around 1500 to 2500 and make a solid 1,000 on each. I'd put in work as far as polishing the frame to make it a chrome nice finish (I would look for aluminum tarnished frames). I even painted one with spray cans one time. I did it all, but to start with a 20k flip...yes you will make money if you wait long enough and take great photos with maybe a video you will find a buyer eventually.

I also flipped cars as well. Made a solid 2k on a lexus I bought recently for 15k cash.

try to flip smaller items so your not so scared to lose, rarely you will trust me.

I now am in a different style business but I started doing this in my late teens to early 20's on the side.

 

[Flybye]

I just became a licensed car flipper. As in I now have my DMV dealership license.