First off - this isn't what flipping cars means...
I mean buying and selling cars to make cash...
What is flipping cars? Like in the property market where people buy a fixer-upper to make it their own, there’s potential to make a few bucks off a car that just needs a bit of cleaning up. Enter a mate of mine from school, Bobby. He’s not quite a car guy, but he’s made some good money from flipping cars as a hobby. He started doing it some time back and it happened by chance too, which is usually a good sign of things to come. Bobby had an aunt that passed away and part of the estate was an old-ish, not very special car that was looking a little worse for wear, and old Mk1 Jetta if I recall. Taking a closer look, Bobby noticed that the car’s only real handicap was lots of dirt and some scuffing, besides that the car looked to be decent. Loads of people see a tatty car and move along, but if you’re willing to spend a weekend buffing and cleaning and detailing, the results can be amazing. Bobby managed to get the car for a bargain price because of it’s “condition” but managed to transform it with a bit of hard work.
“The body gleamed, it was like a different car. After a steam clean to the interior, boot and engine bay, the car turned out to be a stunner. I put it on www.gumtree.co.za and it was sold in a matter of days, at a very good price” comments Bobby. So that’s the first car down and a bit of a profit made.
The financial reward from Bobby’s first flip got him thinking of the property analogy. Browsing through the Gumtree classifieds one weekend, Bobby found another car for what he thought was a good price, but it was another one that looked a tad bit shabby. He contacted the owner to arrange a viewing and he liked what he saw. It turns out the car also just needed some good old TLC. After a bit of a haggle with the seller, he had himself another project car. Two weekends of hard graft and once again, Bobby had himself a great-looking that he knew could be sold for a decent profit. This car flipping thing turned into something of a hobby for Bobby (yeah, that was an unintentional rhyme, I swear!) and he does the buying and selling on an almost monthly basis, a new favourite pastime.
There’s a method to the madness though, Bobby learned a few secrets to make things easier. “Appearance is half of your success,” he says; “buyers looking for a new car, even if it is a used one, want it to look like new.” This is true with most second-hand dealings. People are attracted to shiny, pretty things. “Of course mileage-versus-age is also important. You need to find the right balance at the right price. You also need to know your cars and how much is worth your while spending on them as well as what to expect in return. Its pointless buying a car at the market price that you need to spend a few grand and then expecting to make the money back when you resell.”
You also can’t just buy any car that looks like a bargain, and you should also try and take personal preference out of the equation. That old fixer-upper that you see as potential because you’re a fan of the brand or you have great memories associated with the car might make you buy it, but the buyers out there might not think the same as you. Bobby suggests cars that are in high demand like eco-hatches in the R55k-R75k bracket as these are often bought for cash. Bobby reckons:“You should also be aware of reaching towards the R100K mark and above. At that price range buyers often need some sort of financing, and that can get complicated. Waiting for paperwork, bank clearances and insurance can be enough to make you wanna punch a dolphin. Simpler is better.” Bobby also chooses vehicles with small-ish engines and low fuel-consumption. Additionally traits to look for also include power steering, at least one airbag, aircon, and electric windows. Small autos are hugely popular, especially among older buyers wanting a town car, Bobby has also sold quite a few cars to parents wanting something affordable for their student offspring.
Often to get a car looking like new again, all that’s really needed is a proper valet, but there are other things to look at so unseen costs don’t mess with your profit. Take note of the service history, the tyres and inspect bodywork closely in the corners for rust. Bobby usually has an immediately rough idea of how much he’ll need to spend to make the car a much more attractive buy. The things that need attention can be used to negotiate with the seller. If the seller doesn’t budge and the transaction looks to be not worth his while, he’ll simply walk away from the deal. Complications aren’t needed.
If you’re wanting to do similar, and you’re not as technically inclined as you’d like to be, do what Bobby did and build up a good relationship with an established independent workshop, a tyre shop, a valet centre, and a dent repair shop to fix parking lot dings and scratches. He also stays away from accident damaged or cars that need serious bodywork, you should too.
“The secret is to spend no more than R3k-R4k overall to make the car a seriously attractive one for a next buyer,” says Bobby. “If I got it at a good price and add the expenses, I could sell it for a slight premium above market price purely because of the fresh appearance of the car. It is amazing how attractive a new set of tyres is, the fact that it was recently serviced, and of course that it looks great inside and out. It looks like it has been cared for, and more than anything, that is what people want. That is why it constantly amazes me in what sad state some people sell their old car in, as if they have lost complete interest in it over their last year or so of ownership. But then, that’s good for me, because I can spot another fixer-upper…”
Give it a try, the sideline cash you make can help you save for that dream ride, or whatever else you've had your eye on.