What To Know About Buying and Flipping Cars

Before you consider buying a car to flip and looking to make a profit from this investment, there are a few things you should know.

Sheryll Poe | 

May 10, 2022 | 4 min read

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You've probably heard of flipping houses, but did you know you can also flip cars? For someone with a mind for business and a passion for cars, flipping cars can be a great way to make some extra money while working with something you love.

What is Car Flipping?

Similar to real estate, car flipping is the process of buying a used car at a low price with the express intention of selling it quickly for a higher price. Both sides of the transaction — the buying and the selling — are usually done privately and not through a dealership.

Flipping cars is legal, although most states have limits on how many used cars you can flip or resell in a year without applying for a dealership license.

Flipping vs. Reselling

You may have sold a car at some point, but there's a big difference between reselling and flipping a car. It comes down to the motivation behind the sale — when you're selling a used car, it's usually to make room for a new car so you just want a smooth, hassle-free transaction at market value.

When flipping cars, you want to make the most profit out of the transaction. You need to buy the car low and sell it high by increasing its value in some way, usually by investing in repairs and modifications to the vehicle.

What To Know Before You Buy a Car to Flip

Before you consider buying a car to flip and looking to make a profit from this investment, there are a few things you should know or review to make sure it's viable for you.

Know the Law

Before you start looking for a used car to buy and flip, check your state's laws. Each state has different limits on the number of cars you can sell in a year without a dealer's license. A handful of states, including Connecticut and Kentucky, amongst others, won't allow you to sell even one car for the purpose of making a profit without a dealer's license. Other states, like Vermont and Indiana, will allow you to sell up to 11 cars per year. Check with your state's dealership licensing authority for your state's laws and regulations.

Set a Low Budget

The key to car flipping success is finding and buying undervalued cars at a low cost and selling them high. That means searching Craigslist, Facebook Marketplace, eBay Motors, newspaper classified ads, and auctions to find a good deal. Keep your purchasing budget low and also budget for any repairs the car needs.

Understand Your Market

To resell a used car at a profit, you need to know what the car is worth, what your particular market is like, and what buyers are paying. Online evaluation sites can give you an idea of the average prices of any used vehicles you're considering buying. If there's too small of a difference between what you can buy the used car for and what you think you can sell it for, there might not be enough profit to make it worthwhile.

Read the Listings Carefully

When evaluating whether a vehicle can be flipped, look for low mileage, minimal damage on the exterior (no rust!), clean interior (no weird smells), functioning operating systems, and a clean engine and engine compartment. Ask how many owners the car had and how long it's been sitting. Test drive it if you can, and bring along a mechanic friend if you have one. Finally, be honest with yourself about the costs of any repairs you might have to undertake.

Prepare Your Paperwork

Once you buy the car, there will be some paperwork to legalize the sale. Make sure you have a bill of sale with blank spaces for the vehicle identification number, date, sale price, odometer reading, your name and address, and the seller. You'll also need a transfer title, or the original title needs to be signed and dated by both parties and taken to the Department of Motor Vehicles (DMV) to get a new title in your name. Don't buy a vehicle that doesn't have a title.

Pros and Cons of Flipping Cars

Flipping a car takes quite a bit of work. You'll need to navigate state laws and regulations, have the patience to search for undervalued cars and good deals, be willing and able to undertake auto repairs and/or modifications, take plenty of pictures, place ads, and field calls and emails from interested buyers. You could also get in over your head financially or even get scammed by another seller.

If you have expertise in cars and want to make extra money, however, car flipping can be an exciting side business.

Sheryll Poe

Sheryll Poe is a journalist and freelance writer based in Washington, D.C. where she writes about the latest news and trends in the automotive, finance, retail, and technology industries. With over two decades of experience, Sheryll has bylined hundreds of stories for websites, magazines, newspapers for trade associations and business clients. When not wielding words on behalf of clients, she enjoys cooking (and eating), watching bad reality television, and traveling the world.