No Hype. No BS. Simple strategies that work.

Look For Ugly But Cheap Cars

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When you’re out there trying to find a car that you can flip, keep an eye out for cars that are ugly but cheap. Sometimes those types of cars have the highest potential for profit. Cars that really need a bath are typically going to stay under the radar a little longer than those that have been prepared well for sale.

Let’s be clear, I’m not talking about cars that have awful paint jobs or tons of body damage. I’m talking about cars that are mechanically sound and just need some TLC to make it pretty again.

Here’s an example of a car that I flipped that was REALLY ugly but SUPER cheap.

Ugly But Cheap Flip

This car was caked with dirt and sap when I bought it, and had a few other cosmetic issues that deterred other buyers which helped me buy the car at the excellent low price of just a few hundred dollars.

After fixing it up and preparing the car for sale I sold it for a couple thousand dollars. I’ll be telling the full story behind this flip in the third episode of the 3 Hour Car Flip Podcast so make sure you subscribe to that podcast in Itunes or the Google Play store!

Miles Matter to Buyers

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If you know a little bit about cars you probably already know that mileage plays a big role in the value of a vehicle. Why? Most people believe that the higher the mileage on a vehicle, the higher the likelihood of car problems down the road. That makes demand go down for higher mileage cars, which in turn makes the price go down.

I’ve found that higher mileage is NOT a direct indicator of how long a car will last. If you offered me the choice between a car with 50,000 miles that was poorly maintained vs a car with 80,000 miles that was well maintained, I’d choose the car with the higher mileage every time. However, most buyers that I’ve met would choose the lower mileage car.

That’s something you’ll need to keep in mind as a car flipper – miles matter to buyers.

Let Your Words Do the Work

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BEFORE you go to see a vehicle that you’re thinking about buying make sure you ask as many questions of the seller on the phone as possible. Getting answers over the phone rather than in person will help save you a TON of time.

Here are a few great questions to ask before you ever meet with the seller:

  • How many miles does it have?
  • Does it have a clear, in state title?
  • Is the title in your name?
  • Are there any mechanical problems? If so, specifically what are the mechanical problems?
  • How far away are you located from me?

Save yourself time and aggravation – ask questions before you get there.

Check Your Checklist

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When you’re inspecting a vehicle that’s a potential flip make sure you bring a checklist with all of the items that you need to inspect. If you’re like me relying on your memory for all of the details is just going to cause you to miss something that you’ll wish you’d checked out BEFORE you buy your car.

Want to see a checklist that I use? Click here to check it out.

Question, Question, Question

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When you are looking at the vehicle, try to ask the seller as many questions as possible. Here a few of my favorite questions to ask:

Does it have a clear, in state title?

Salvage or rebuilt titles can deter buyers, and you’ll want to make sure that the title has not liens or loan payoffs required in order to obtain the title. You’ll also want to know if the title will require out of state processing, which could require a notary.

Is the title in your name?

If the seller doesn’t own the car, and they don’t have power of attorney from the owner, they legally can’t sell it. Don’t fall for any “well my mom said I could sign for her” stuff. That will open you up to all kinds of legal liability.

Are there any mechanical problems? If so, specifically what are the mechanical problems?

Something that the seller considers a small problem might actually be a big problem. Make sure you ask specific questions. This question usually sniffs out major issues that the seller hasn’t already disclosed.

What is your reason for selling?

Beware if the reason for selling is questionable. Ideal answers to this question are “we just don’t need an extra vehicle” and “we needed a car for the winter and this car is rear wheel drive”.

If you don’t trust the seller or feel like the seller is not being honest, walk away. Your instincts are likely to be correct. If the seller tries to talk quickly or avert your attention while you are inspecting the vehicle, beware. The more questions you can ask about the vehicle, the better equipped you will be to make a sound purchase.

Fall in Love with Problems

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People that enjoy car flipping know that most buyers avoid cars with problems because they just don’t want to deal with the hassle of having repairs done. Lower demand usually equates to lower prices. As a result, great car flippers actively seek out cars with problems.

I’ve found that sellers of cars with problems price their cars well under what the car’s value actually is – even lower than what parts and repairs would be to fix the car. Unless the car needs major repairs, I usually find that buying a car with problems offers much more profit margin than one that has nothing wrong with it.

Here are the types of car problems I usually love to see in a car:

  • Dead battery
  • Missing dash knobs
  • Check engine lights
  • Minor engine repairs

If you find a car with a check engine light just make sure you get it checked out at your local parts store before buying the car (which is usually free). You may even want to invest in a code reader so you can check the codes yourself – something I recommend for car flippers.

There are some car problems that you should avoid like the plague because they have the potential to cost tons of money. Here are a few of those:

  • Transmission slips
  • Engine knock noises
  • Body damage
  • Title Problems

If you do buy a car with one of the issues listed above make sure you either really, really know what you’re doing or you buy the car at a really, really low price.

Master Your Price Range

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Whether you choose to flip cars in the lower priced common car range ($1000-$3000) or higher end specialty car range ($30,000-$300,000) you’ll want to make sure that you become a master of knowing what a good deal and bad deal actually look like.

What’s the difference between a $3000 Honda Accord and a $5000 Honda Accord? There are a variety of factors that influence value and you need to be very familiar with those factors in order to spot good deals.

Make sure you rely heavily on whatever pricing guide you choose to use. I use KBB. If that’s the one you use make sure you download their free app so you’ll always have the most current values with you when you’re mobile.

Only Trust Yourself

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When you’re interested in purchasing a car to flip don’t just assume that the seller’s words are facts. Do your own research no matter what the seller says about the car.

That’s not to say that everyone is trying to rip you off because they aren’t. Though you might run into someone that IS trying to rip you off, I’ve found that most people just want to sell their car and don’t have any malicious intent.

Major problems usually don’t occur because the seller is lying to you about car problems. In my experience the majority of problems occur because the seller just didn’t know about everything.

It’s ultimately your job to do all of the research and make sure you’re buying a good car. After all, when you sell a bad car to someone else, it will be your reputation on the line, not the person’s that you bought it from.

 

Look For Junk in the Trunk

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This tip is short but sweet:

When you’re inspecting a vehicle for purchase always make sure that you open the trunk and look for any empty fluid bottles. Empty fluid bottles might indicated a fluid leak that the seller is attempting to cover up.

Turn Off the Noise

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During the test drive of the vehicle, turn the radio off so you can listen to the engine. This is an important step and you’ll want to make sure that you get the opportunity to hear any odd sounds.

If the seller rides with you, try to limit conversations with him/her so you can totally focus on the drive quality including the noises the car makes.

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