When flipping cars, mistakes can cost you in more ways than one.
The FBI said that the woman and her (already arrested) boyfriend had been advertising in newspapers. They said they were looking for vehicles to flip. Once the scam victim’s car was acquired, the duo put it up for sale.
There are a few car flipping mistakes that you should try to avoid making. Here are five of them.
1. Lack of Meaningful Research
It’s important to have an understanding of the vehicle’s optimal value, mechanics, condition, and current market demand. Without proper research, it’s easy to be taken advantage of when buying a vehicle.
It’s also important to look into the vehicle’s mechanical condition, including maintenance records, cost of repairs, and any track record regarding specific model failures.
2. Overpricing Your Used Car
Overpricing a used car can sometimes prevent a sale from happening altogether, as potential buyers may not be willing to pay too much above the market value. It is also important to understand what your car is worth, as small discrepancies in the blue book value can drastically affect how much you can sell it for.
In addition, understanding other factors such as desired features, condition of your car, and mileage will help you to more accurately determine the value of your vehicle. Ultimately, understanding the fair market value of your car is key in order to avoid the mistake of overpricing your used vehicle.
3. Underestimating Repair Costs
Underestimating repair costs is definitely one of the top big car flipping mistakes to avoid. Oftentimes people get so caught up in the glamour of car flipping that they forget the actual cars to flip for profit and effort involved.
Before buying a car for flipping, the individual should do the research and acquire a realistic idea of how much the repairs are going to cost. A checklist of things that need repairing should also be made in order to realistically plan for any extra costs that may arise.
4. Failing to Secure Financing
Many flippers opt to “play it fast and loose” when it comes to the financing aspect of flipping used cars. Unfortunately, not having a financing plan in place before picking up the car can be detrimental to your ability to make a profit or can even lead to financial disaster.
It’s important to meet with banks and lenders prior to purchasing any cars to get pre-approved, know your estimated rates, and familiarize yourself with the different loan products. Failing to secure financing can lead to missed opportunities and, in the worst-case scenario, may mean losing out on a potentially profitable car deal.
5. Poor Planning for Resale Value
It is important to consider resale value when finding the best cars to flip. Poor planning for resale value can result in an accumulation of losses. Begin by researching the current market, including prices of similar cars.
If a repair is deemed necessary, choose parts that will keep resale value at or above the purchase point. Do not make custom modifications that could significantly reduce the vehicle’s resale value.
Learn More About Car Flipping
Overall, car flipping can be a great way to make a profit. As with any business, it is essential to know what mistakes to avoid.
The five big car flipping errors to avoid include not relying on luck, not knowing your market, not having a thorough plan, not budgeting correctly, and not researching thoroughly.
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