Author Topic: Buying wrecked salvage cars to fix and flip profitable?  (Read 7747 times)

Kaplin261

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Buying wrecked salvage cars to fix and flip profitable?
« on: December 31, 2017, 01:32:13 PM »
So I got this bug and Iím now obsessed with wanting to buy a wrecked car, repair it and sell it. I know itís a little risky but Iím willing to take a gamble.

My plan is to buy a wrecked Honda Civic years 2013-2015 off of a website called Copart that has a car lot about 15 minutes from my house. 

I am computer hardware engineer at a data center. I used to buy crashed motorcycles and fix fiber glass panels and flip them after driving them during the summer, this was about 15 years ago before I became wealthy. Iím about to retire in the next couple years and want something to do to make extra cash and keep me busy when I feel like it. I have a 400 sqft attached garage and a decent amount of tools.

I was interested in seeing if any other mustachians do this. How profitable is it and how much  do you make per hour invested in it. I plan to sell less than 3 cars a year so I will not be required to get a dealership license. I also plan to drive the cars as I try to sell them at top price.

GuitarBrian

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Re: Buying wrecked salvage cars to fix and flip profitable?
« Reply #1 on: December 31, 2017, 07:13:46 PM »
When I was a kid, this is what my Dad did for a living. He bought wrecked cars from an auction in Denver (now owned by Copart), bought parts, had them fixed, and sold them. Back then the numbers were basically, $3k for the car, 3k to fix, and 3k profit. Then it all changed, the manufactures started cancelling the warranty, and so prices cratered. There's still a market, but but make sure you research it.

He suggests targeting new cars that have not had model updates for as long as possible. So there are used parts available. Otherwise airbags alone will kill the deal. Many times it is best to buy a car hit in the front and one hit in the back/different location and combine them.

No idea of the profit per hour. It will depend on your proficiency swapping parts, scratch and paint... And the "last 10 things". Plus don't forget detailing.

Car Jack

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Re: Buying wrecked salvage cars to fix and flip profitable?
« Reply #2 on: January 01, 2018, 08:50:50 AM »
There's a process in Virginia.  You don't just buy, repair, sell.

https://www.dmv.org/va-virginia/salvaged-vehicles.php

Khaetra

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Re: Buying wrecked salvage cars to fix and flip profitable?
« Reply #3 on: January 01, 2018, 10:13:28 AM »
There's a process in Virginia.  You don't just buy, repair, sell.

https://www.dmv.org/va-virginia/salvaged-vehicles.php

Wow, that sounds like a heck of a lot more time, trouble and money than it's worth!

Kaplin261

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Re: Buying wrecked salvage cars to fix and flip profitable?
« Reply #4 on: January 01, 2018, 10:25:52 AM »
There's a process in Virginia.  You don't just buy, repair, sell.

https://www.dmv.org/va-virginia/salvaged-vehicles.php

The extra step you mentioned is indeed needed. However I assumed most people would already assume the state is going to look at your car and make sure it is road worthy. ($125)

The_Pretender

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Re: Buying wrecked salvage cars to fix and flip profitable?
« Reply #5 on: January 01, 2018, 12:11:57 PM »
My FIL does this as part of his auto shop business.  Have you looked and understood all the fees associated with CoPart? I recall him talking about several fees associated with that particular company.  You may want to also ask around.  The copart my FIL went to lost the Progressive Insurance contract.  So the quality and quantity of cars diminished rapidly once that contract went to the other salvage auction company in the region.  Spend time watching the auctions on line.  It is amazing how many different countries purchase/bid on cars. 

The benefit of the copart being down the road from you is that you have access to check the car over.  Many bidders rely on photos and never see the car in person.  You have the ability to go turn the car on (assuming someone before you didn't purposely kill the battery by leaving the headlights on).  You can see how the interior of the car was treated (smoker).  You can also open up the glove box and look around to see any maintenance records.

As someone noted above, understand approximately what costs you will have in replacing/fixing items.  Airbags can be expensive to replace, especially if the steering wheel is a unique color.  my FIL helped us find our car and fix it, during that time, we found a car we liked, but the interior was only 5% of the production run.  So he would have to buy a special airbag which would be twice as much if it just was a black one (the other 95%).  It would also be helpful for you if you know a good frame guy who can pull and fix any frame damage.

In the end, you may have better use of your time looking for damaged vehicles on craigslist or marketplace.  Here you can come across people selling their car because it costs too much to repair...

Mtngrl

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Re: Buying wrecked salvage cars to fix and flip profitable?
« Reply #6 on: January 01, 2018, 12:27:10 PM »
My brother maxes extra money fixing and flipping cars, but he doesn't bother with wrecks. Instead, he buys older cars that need work -- he buys a lot of them from private sellers and some from auctions. He fixes any rust, paints them, makes sure they're mechanically sound, details them. Often he replaces the headliner and upholstery. They end up looking great and he sells them for a profit. He works for a dealer and has access to parts at wholesale prices and knows how to fix all this stuff himself. And he'll only buy a car to work on if it's really cheap -- I think he gets most of them for under $1000 -- and he knows how to spot ones that mostly need cosmetic work, not major engine work (though he's fine with replacing waterpumps, alternators, brake jobs, stuff like that.). He does two or three a year, depending on what 'deals' he comes across.

AlexK

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Re: Buying wrecked salvage cars to fix and flip profitable?
« Reply #7 on: January 01, 2018, 12:48:26 PM »
I flip motorcycles all the time and it has been a ton of fun. I buy bikes that don't run or have been neglected and fix them up then resell. All on craigslist or Facebook. Sometimes I end up parting them out on ebay if the profit works out better that way. I prefer motorcycles over cars because there is less competition and a motorcycle is just a lot more fun to work on. You don't even have to lay underneath it and have crud landing in your face while working on it. Also there is no smog check requirement on motorcycles.

The profits are good but I do it for fun. I get excited when a part comes in the mail and I get to be in the garage for a while using all my tools. It is satisfying to start with a thing that doesn't work at all and end up with a thing that works flawlessly. I like to give someone a good deal on something that I know is perfectly sorted and will last a long time.

In my state the DMV doesn't require the seller to report who they sold a vehicle to, so I never sign the titles. We don't even need a bill of sale and there is no sales tax on private party sales here.

lbmustache

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Re: Buying wrecked salvage cars to fix and flip profitable?
« Reply #8 on: January 01, 2018, 04:21:00 PM »
My brother maxes extra money fixing and flipping cars, but he doesn't bother with wrecks. Instead, he buys older cars that need work -- he buys a lot of them from private sellers and some from auctions. He fixes any rust, paints them, makes sure they're mechanically sound, details them. Often he replaces the headliner and upholstery. They end up looking great and he sells them for a profit. He works for a dealer and has access to parts at wholesale prices and knows how to fix all this stuff himself. And he'll only buy a car to work on if it's really cheap -- I think he gets most of them for under $1000 -- and he knows how to spot ones that mostly need cosmetic work, not major engine work (though he's fine with replacing waterpumps, alternators, brake jobs, stuff like that.). He does two or three a year, depending on what 'deals' he comes across.

Yep, I recommend this route if you are handy with cars. Salvage cars are generally more trouble than they are worth IMO - what if you buy one, pull it apart, and find that it has major electrical or frame damage that is costly, if not impossible, to fix. It's much easier to buy a non-running beater (replace clutch or engine, fix leaks, etc.) and get it up to speed.

Ankenystache

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Re: Buying wrecked salvage cars to fix and flip profitable?
« Reply #9 on: January 01, 2018, 08:29:41 PM »
Unless you have done this line of work as a career or have someone helping you that does, please reconsider. I do this work every day (collision shop). When done right a builder is just as good as a normal car. But the problem begins when people start to cut corners. They are salvaged for a reason, the cost to repair CORRECTLY is too high.
The liability these days is changing for the worse, people are sue happy if you dont do the the work to OEM standards every time with documentation.

I would hate for someone to be killed or injured due to my negligence in a repair to save a few bucks, thats why I follow procedures for everything. Builders are great money savers if your doing them for yourself because the labor is free, but please dont try to turn a profit at someone elses expense.

If you take one nugget from anything about repairing damaged cars please google Texas collision lawsuit. A Shop was found liable($42 million) for wrongly (by manufacture standards) repairing and sued like crazy. The repair wasn't bad, it just wasn't correct by the OEM, and even though most in our industry dont believe it had anything to do with the outcome, it was a eye opener for the entire industry in that your warranty and liability doesnt stop once the car is sold.





Kaplin261

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Re: Buying wrecked salvage cars to fix and flip profitable?
« Reply #10 on: January 02, 2018, 08:32:42 AM »
Unless you have done this line of work as a career or have someone helping you that does, please reconsider. I do this work every day (collision shop). When done right a builder is just as good as a normal car. But the problem begins when people start to cut corners. They are salvaged for a reason, the cost to repair CORRECTLY is too high.
The liability these days is changing for the worse, people are sue happy if you dont do the the work to OEM standards every time with documentation.

I would hate for someone to be killed or injured due to my negligence in a repair to save a few bucks, thats why I follow procedures for everything. Builders are great money savers if your doing them for yourself because the labor is free, but please dont try to turn a profit at someone elses expense.

If you take one nugget from anything about repairing damaged cars please google Texas collision lawsuit. A Shop was found liable($42 million) for wrongly (by manufacture standards) repairing and sued like crazy. The repair wasn't bad, it just wasn't correct by the OEM, and even though most in our industry dont believe it had anything to do with the outcome, it was a eye opener for the entire industry in that your warranty and liability doesnt stop once the car is sold.

I didn't give much thought to the liabilities but that could be a game changer. Granted I am not a licensed mechanic with a business license and I would disclose that in a written ad on craigslist. If anything this may just be a thing i do every couple years when opportunity presents itself.