Sunday, May 29, 2011

I'd like to Flip cars, but what kind of cars should I buy?

Well the first thing I like to do when I flip cars is go to my source for finding public and government auctions (There is a free trial but after that there is a one-time fee of around $40. This grants you a lifetime membership and you do not have to be a dealer to be a member) and look around at approaching auctions in my area.

For instance, I see one that is coming up this week with about 175 cars and trucks. As I examine the list, I find 5 2004 Ford Focus’s. Now I usually do not care about Focus’s one way or another, but the miles on these are excellent. Three of them have between 31,000 and 34,000 miles. And the other 2 has 39,000 and 40,000. For inexpensive, 7-year-old cars, this will be a massive selling point.

The auction listing also shows me that these vehicles were previously "government owned". That explains the low miles and now I'm definitely interested. It is very probable that these were driven by local government office employees when they had to venture out into the field, apparently not often our case. The great thing about it is that government owned vehicles are normally very well maintained, so these 5 vehicles are looking like primary examples of vehicles I can buy extremely cheap and flip for a profit fast.

Alright, so the next thing we do when we flip cars at these auctions, is set up a max bid target price, so now I look for the trade-in value of these vehicles. If I use Kelley Blue Book, that is really just a rough estimate that can be off by alot. To make sure, what I try to find out is what are Dealers paying for this car at dealer auctions. This is the True trade-in value.

Now I know where to get this information, but most of you won't. Don’t worry, Here is how to get it:

Call up a nearest loan department of your local bank and inquire about a Manheim Market Report (MMR) price. Most banking institutions worth anything subscribe to this information. If yours doesn't, just call another bank.

Nevertheless, you will learn that the average selling price for 2004 Focus’s in good condition at these dealer auctions are $2,300 (this is a car or trucks true trade-in value).

However, the Focus’s I am interested in are way under average in miles and would more than likely go for way more than this at the Dealer auction. So because these vehicles are at a public auto auction, where prices are normally lower, I’ll set my max bid at no more than $1,500.

Next I go to autotrader to see the selling prices for these in my local market. I see they are selling on average for around $3,600, but they have two or three times the mileage my potential flips have. So, I will look for a selling price of $3,500 and my car will jump right out at potential car buyers. I’ll likely sell it in a day or two. However if it does not sell in a weeks time, I'll simply lower the price to $2,900 and it sure enough will be sold.

At these prices, a vehicle with low miles are usually irresistible to anyone looking for inexpensive transportation, or looking for a vehicle for a child to get around town or college. And whether the net profit is $1,400 or $2,100, it’s nice for a few hours of work, and this is why I flip cars for a living!

No comments:

Post a Comment