To get started flipping cars all you need is the money to buy you first car. You can then reinvest the same money once that car is sold. You then repeat the same process as many times as you like whilst taking a profit on each deal, with the initial money from the first car being reinvested again and again.
It really can be that simple!
Most car flippers start this way. It’s a great way to get started and you can learn as you go without risking much capital or borrowing any money. You can use this strategy and make a good additional income selling cars on the weekends whilst holding down a full-time job. By flipping the occasional car you can make an additional income to help you pay down debt, fund a holiday, or buy a better or new car for yourself. If that’s your plan then this is all the money you will ever need to start flipping cars.
If you want to learn about which cars you should be flipping check out our guide to Which cars should you buy to flip.
Flipping cars in this way is the most common strategy and makes the most sense for most people. But you obviously don’t have to stick with flipping just the one car. After you have flipped you first few cars you should hopefully have made a good profit, ideally around a $1000 or £1000 per car if you’re doing it right. You could then reinvest this money into more than one car. You should then be able to sell more cars and make more money, this is when car flipping can become interesting and highly profitable.
If your full-time employment covers all your monthly financial needs you could alway reinvest all you profits from car flipping. Reinvesting the returns on an investment is what wealth experts and financial advisors call compound growth when talking about stocks and shares. But it generally applies to any investment or appreciating asset when you reinvest at the profits instead of withdrawing them. Compound growth is a powerful wealth building tool and can make a great deal of money over time.
This is the basic strategy that very successful car dealers and investors use to make huge profits, and is also the strategy used by most established classic car dealers. If you can afford to reinvest this money, you can then either invest in multiple cars or move upmarket to more expensive models or classics. It is totally possible that over a few years for you to start out flipping Japanese hatchbacks on the weekend and trade up to owning and selling cars at international auctions if you put in the time and effort.
This strategy is also how car flippers end up becoming car dealers. A successful flipper can soon find that their weekend side hustle makes them more money than their day job. This success often leads to them becoming a full time car flipper or investor. This in turn leads to them to becoming car dealers after the money they have made flipping becomes too much to reinvest back into a small car flipping operation.
But in truth there is very little difference between a car flipper and dealer by this point. The strategy is the same, with often the only difference being the size and scale of the business.
If you don’t want to grow the business and and many flippers choose not to, you can simply invest in a more upmarket car or cars. If you buy wisely you can trade in cars in the $30,000 – $50,000 ( £30,000 -£50,000) price range and make much bigger returns than when you are investing in hatchbacks. Profits at this price point typically range from $6000 – $10,000 or the equivalent in pounds. The risk to your capital is obviously higher but the experience you will have gained buy this point should help negate this risk.
You can still hold down a full time job at this point, but other sales options become feasible once you have moved upmarket. Instead of flipping cars yourself using social media of classified adverts (we’ve written an article covering The best way to advertise and market a car.) you can sell cars at auction or give cars to specialist dealers who sell cars on consignment. You can still compound the profits, the only change here is you outsource the actual sales process to a third party. Both options car work well and in most cases there is no upfront cost and it will cost you nothing until the vehicles have been sold.
Car flipping can be a great side hustle that lets you make a great additional income whist holding down a full time job. Car flipping has very few downsides and the upsides greatly outlay any risk. If you are successful you can also scale flipping into a full-time business or simply move upmarket and make even greater profits.
We have written a foolproof car flipping business plan to help you get started find it here – Car flipping business plan.