Where exactly do you start and what should your first flip look like? This article will help narrow down you choices. The first mistake first time flippers make its to procrastinate of which car to buy.
Most fear their first purchase so much they never make it. They think they have to buy the perfect car and take days to study and research it. If you follow the steps below you’ll instantly narrow your choices. Making your first investment decision much easier.
If you are just starting out I would start by focusing on small cars with low running and insurance costs. The sort of car that would appeal to a first time driver, senior driver or someone looking for good reliable transport. This type of car is usually easy to appraise. So if you make some mistakes you shouldn’t get any big bills. These cars are also generally fast moving and easy to value.
The ideal car flip should be a
- Small cars with low running and insurance costs
- Retailing between two & three thousand pounds, with a £1000 margin
- In either Grey, Black, Blue or Silver
- In the appropriate trim level and interior colour
- It should have a manual gearbox
- It should be Petrol powered
- Having covered under 80,000 miles
- Have full service history
- With no major bodywork or mechanical issues
- and be HPI clear
What size car should I focus on
I tend to favour small 5 door hatchback models from the likes of Toyota, Ford, Fiat, Renault, Suzuki, Hyundai, Kia and Smart. Three door cars are to be avoided unless they are cheap. My experience teaches me that three door cars can be significantly harder to sell as the majority of buyers are looking for five doors.
A Ford Ka for example is a much harder car to see on than a five door Fiesta at the same mileage, colour and price point. So unless a three door hatchback is cheap, it’s best to be avoided.
How much should you spend?
Most part time car flippers are operating at the £2,000 – 3,000 price point, working on a £1000 margin. So you need to be looking for cars that can retail at £1995 and owe you no more than £800 – £1000, or £2995 with a stand in price of £1500 – £1750. Leaving a little movement to get a deal done and still maintain margin.
You will make a little more on some deals and a little less on others, but most seem to average £1000 per deal over the course of a year. You might start buying cars at £500 and trying to get £1000 retail. But most successful long term flippers operate in the two to three thousand pound price point.This being the fastest moving part of the market, allowing for great profits and a fast turn over if you get it right.
Which colours sell best
You really do need to think about colour. With the internet being such a visual experience everyone searching for a new car will be looking at colour first. It’s a big deciding factor in any car purchasing decision. So you need to be focusing on it too.
The most popular new car colours in 2018:
- Grey 20%
- Black 20%
- White 18%
- Blue 16%
- Red 10%
- Silver 9%
When I started in the trade I was always told to avoid red, white, green, brown and beige. Rules I have stuck by. The used market doesn’t always reflect the new. For example a white Mercedes A-Class will look great when new in the showroom. But add years of use and tens of thousands of miles and even with a great valet the paint work will look tired. Darker colours and especially metallics seem to hold their shine for longer.
All that said. I have done very well with orange and especially pink on occasions. Pink is always rare and has a certain appeal to a certain customer type, who will happily pay a premium. So it’s often a shrewd investment. But if you are just starting out and only have a car or two in stock you may be best sticking to the more conventional colours.
Some cars have signature colours like some Ford RS and ST models being most popular in Racing Blue. People also seem to favour launch colour schemes, or the colour shown in the original brochure or advert.
What spec you should look for and what to avoid
You need to approach a cars spec level in a similar way as you would a signature car colour. For example a Ford Fiesta in LX spec is always at a disadvantage against a more common Zetec or Titanium specification.
Also a Mercedes without leather should always be avoided at all costs, you will not be able to give it away! The same can be said for non M Sport BMW’s with wood interiors. All cabin woods should be avoided, even the once popular piano black is less desirable now than brushed aluminium or carbon fibre.
Seat colour in general should be black or dark grey. Lighter interiors show wear and tear more easily. Brighter colours such as red can look cool, but can reduce the number of potential buyer. While on the subject of leather if the car comes with leather it always needs to be heated. None heated leather can be a hard sell in the winter months.
Air conditioning, remote central locking and alloys are all essentials these days. As is some form of phone connection for calls and music.
If a car smells funny you should walk away. I have tried every kind of wonder cures for this, but you will never be able to fully remove bad odours. If a car smells of dog or smoke it’s always going to. So just don’t put yourself at a disadvantage.
Manual vs Automatic
When you are starting out I would stick to manual gearboxes as a rule. Some cars are very popular in automatic and in the last few years gearboxes have improved massively. But if we are talking hatchbacks, then manual gearboxes are by for the most popular. You are also much more likely to have an issue with and automatic box and repairs are normally always expensive.
But similarly to the trim level some cars should always be bought in Auto. Mercedes A-Class for example should always be bought in Automatic, as the majority of buyers will be looking for a two peddle gearbox. The same goes for the later Smart cars.
Diesel, Petrol or Hybrid?
If you are sticking to the hatchback or small car principle. Petrol cars are normally best, you need to stick to low capacity engines. Probably no bigger than say a 1.4 turbo. The number of cylinders really isn’t a concern.
I don’t have a problem with Diesel cars. But they have had a lot of bad press lately, which in turn has made them much harder to sell on. They also seem to suffer more age related problems. Which is why I try to avoid them at lower price points. The associated issues always seem more costly and complicated than with their petrol rivals. So if you are just starting out I would advice sticking to petrol powered cars. You also stand a better chance of a quick flip.
Again I don’t have any real issues with hybrid cars. But they do often attract a more cautious buyer. Also often people worry about costly issues that may require a trip to a main dealer. So are more likely to search out a used dealer who will offer warranty etc. So similarly to Diesel powered car hybrids are probably not the best place to start.
Needless to say that the lower the milage the better. But with small cars ideally something in the range of 40-80,000 miles is an easy car to flip. But some cars wear mileage better than others. I would rather be in an 100,000 mile Honda Jazz that a 40,000 mile Perodua. Every customer and car is different but try and keep the miles down.
Service history essentials
Service history is important at all price points. But maybe even more so at the lower end. People looking at this end of the market need a good car on a budget and are worried about getting stung. So always make sure the car has at leased some history. If its missing some years or hasn’t had a recent service, allows me money to get it done. A recent service is more important that what happened 5 years ago.
One question you will always be asked and always need to ask yourself is… has the cam belt been done and does it need doing soon? Cam belt changes are often the reason people part exchange a car in the first place. They range in cost from a little as £300 to thousands. So it’s vitally important that you know if the engine is belt or change driven and make allowances in the budget if it requires changing.
But a complete history and ideally invoices make the sale a whole lot easier. Getting previous history used to be easy, but the new GDPR rules have complicated the situation.
If the car has no history, even if its super cheap it’s probably best to just walk away.
It’s amazing what will polish out. I have bought cars with what appears to be five or six panels of paint work. Only to find it all polishes out after 15 minutes with some compound and a cloth. But these cars are the exception and not the rule.
I don’t advice buying cars that need anything more than a smart repair. Little jobs like bumper corners, painless dent removal and alloy wheel repairs. Larger jobs can again be time consuming and expensive. I have lost count of the times I have waited weeks for a bit of trim or a panel to arrive only then to find the bodyshop is fully booked for a few weeks. Resulting in long delays and money tied up.
So even if you are experienced in the dark arts of car body repairs, I would still advice buying a clean car needing as little body repair as possible. Allowing you to turn the car around as quickly as possible.
It’s great if you have a little mechanical knowledge. But it’s not essential at all. I know very successful dealers with almost no understanding of how and what an engine does.
But you can always find a course to educate yourself, or simply watch hours of Youtube content. Most dealers learn on the job, myself included. But obviously with a smartphone in our pocket the internet is a great place to find information on almost any car or problem. This resource can be invaluable. A quick search while inspecting a potential purchase can be very insightful.
I would also advice nurturing a good relationship with a small local garage. This can be invaluable especially when you get something wrong. These garages are normally a gold mine of information. Plus if you bring them regular business you can normally arrange a trade rate. This relationship can be very important and can sometimes be a good source of stock. The first car forecourt I rented came from one of these relationships.
This is super important
The final thing your flip needs to be is HPI clear. This means the car has no outstanding finance owing on it. This check will also tell you if the car has ever been in a crash. If you are buying from a Franchise Dealer, they will normally have checked the car on the registry already and can supply a copy to the certificate. If not it is essential you do this yourself.
Basically if you buy a car with outstanding finance on it. You will be unable to sell it on and may face the loss of any funds you have invested, as the car technically is the property of the a finance company who registered the interest. So it is essential any car you buy regardless of cost or age is checked.
I don’t advocate selling anything recorded as being in a crash. Leave the car for someone else. They are always hard to sell on and never worth the hassle.
Once you have found you ideal flip you simply repeat the process again and again it really can be just that simple. If you follow these simple guidelines you should be well on your way to car flipping success.