Author Topic: Sharing another way to make some side cash  (Read 13771 times)

cbr shadow

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Sharing another way to make some side cash
« on: January 03, 2013, 10:41:25 AM »
I've repeated this process 6 times in the last 2.5 years so it's a confirmed money maker if you're willing to do a little work.
Here's an explanation of the most recent time I did it..

Basically if you know someone trading in a car to a dealer, (especially carmax) you buy it from them with cash for a bit more than the dealer is willing to give, then sell it privately.

A coworker bought a Prius from Carmax and traded in his old 1997 Lexus ES300 with 160k miles.  They offered him $1000 and he decided he'd take it.  He told me about this and I told him I'd take the car off his hands for $1300.  He agreed and I bought the car outright with the intention of selling it privately.  I was very clear with him that I plan on flipping the car to make money, but we was fine with that and said he "didn't want to deal with people".

So I bought the car for $1300, cleaned it up (very dirty inside) and gave it a good wash/wax, total of about 2 hours invested.  Then I took some pictures and posted it on craigslist for $2800.  Not exaggerating, 10 minutes after posting the ad I had a guy call saying he wanted to buy it.  Came to my house with cash and we settled on $2400!  That's $1100 for 2 hours of work and I only had the car for about 1 full day.

This isn't an isolated incident though.  I'm starting to be well-known for selling cheapo trade-ins and my family/friends/coworkers are always telling me what Carmax or other dealers offer them as trade-in value so I'll usually beat it by a few hundred dollars.  This was the 6th time I've done this in just over 2 years.

Anyways, I thought I'd pass the information to fellow MMM readers so that hopefully you keep your ears open for someone that is trading in their car for a low amount and doesn't want to deal with selling it privately.

As a side-note: I dont feel this is ethically wrong at all.  I told my coworker up front that he'd get a lot more money if he sold it privately.  He knew this but still sold me the car with the understanding that I'm not buying it to use it, but to sell it for a profit.  I'm clear with everyone that I buy from that this is the case.  Only once did I have someone say they wanted me to pay $2400 for a car that Carmax was giving them $1300 for.  I walked away from that deal and the person ended up taking the $1300.

One more thing to note: Carmax doesn't require you to buy a car from them in order to buy your car.. they'll buy from you regardless.  I understand the tax advantages of trading in your car on a car you're buying, so I make sure to cover that benefit with the price I offer.
-Ryan

Jack

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Re: Sharing another way to make some side cash
« Reply #1 on: January 03, 2013, 10:50:33 AM »
Depending on rules regarding title & registration, and the rules of who counts as a "dealer," that may not work in some states (like Georgia, starting now: http://www.ajc.com/news/news/new-one-time-car-tax-raises-cost-of-private-sales/nTkJc/)

Blackbomber

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Re: Sharing another way to make some side cash
« Reply #2 on: January 03, 2013, 11:07:06 AM »
In Connecticut, you aren't supposed to sell more than 5 cars per year as an individual. I have a good friend who used to (still does, but now lives in SoCal) flip cars all the time. He sold some of the cars in my name to get around it. My compensation is that he would take me to the junkyards, and let me pick out my own cars (did it once). That's right, he would buy cars straight out of the junkyard and sell them. These were cars donated to charity, that the organization did not feel were worth using / selling, so they were scrapped. We would buy them for $300, and often sell for $1000 or more. In every case but one, they had clean titles, and minor (if any) issues. I was the lucky one who bought the car with both a salvage title (cost $80 to clear up) and a clutch that went within a month (I bought it for myself). I still made money on that car (not counting my labor for the clutch replacement).

cbr shadow

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Re: Sharing another way to make some side cash
« Reply #3 on: January 03, 2013, 11:35:30 AM »
 I forgot to mention a key part.. I didn't register the car at all, or get plates or insure it.  I had the signed title from my coworker that I handed over to the buyer.  I only acted as the middle man.  I believe this is legal to do here except the part about not paying taxes on my profit.  I called around to a couple dealerships and they all gave me the same answer "I dont see why doing that would be a problem legally.. people do it all the time".  Either way though, I dont see a big risk here in doing this.

tooqk4u22

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Re: Sharing another way to make some side cash
« Reply #4 on: January 03, 2013, 11:38:09 AM »
You are essentially employing a long running strategy of car dealers - have done this in the past as well.  Aside from rules and regulations you need understand it is both a job and an investment....the job part is the clean-up/repairs as needed and buying and selling....the investment part is the opportunity cost of your capital being tied up and the risk of loss associated with no being able to sell or having an unknown issue come up.  Regardless it can be a nice source of supplemental income if done correctly.

FWIW - I don't think it would be unethical even if you did not tell these people that you intended to flip it, more honorable - yes, but not unethical.

Blackbomber

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Re: Sharing another way to make some side cash
« Reply #5 on: January 03, 2013, 11:46:42 AM »
...I had the signed title from my coworker that I handed over to the buyer.  I only acted as the middle man...
In the cases where you can get the seller to sign the title / bill of sale without completely filling in the buyer's info, this is the way to go. In my examples, we were buying cars that had been transfered from the last registered owner, to the kidney foundation charity, then transferred to the junkyard, and again to us. However, I doubt the state would ever even notice if anyone went over the limit, unless it was a huge quantity, or someone complained.

cbr shadow

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Re: Sharing another way to make some side cash
« Reply #6 on: January 03, 2013, 11:53:37 AM »
Good info guys.
As far as repairs go, I try not to do any at all.  If Carmax is willing to give $1000 for a car the way it is, I would bet ($1000 lol) that there is someone in my area willing to pay twice that amount for the car right now.  I've made this bet several times and it always seems to go well.  This particular car was very dirty inside and out so a couple hours of cleaning/scrubbing/vacuuming is all it needed.  I also never hide issues that the car has - when I sold the car last night I pointed out all of the issues right away and the buyer was fine w/ them.


frugalman

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Re: Sharing another way to make some side cash
« Reply #7 on: January 03, 2013, 12:52:27 PM »
In 2012 I traded in a 2003 Honda Accord EX with 140,000 miles on it in very good condition.  I got $5,600 in trade value from the dealer (not wanting to sell it myself because it had some issues I didn't want to fix and didn't want to not tell a buyer about).  One week later, I saw it listed on the dealer's website for $9,995!  They probably just washed and cleaned it up!  Even if they sold it for $9,000, and the buyer thought they were getting a good deal, they still made $3,400 on the trade.  In fairness to the dealers, they don't make all that much money on the sale of a new car, and tradeins and service are the big money makers for them.

Nephi

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Re: Sharing another way to make some side cash
« Reply #8 on: January 03, 2013, 03:54:50 PM »
That's awesome! Anybody know how I could find the blue book value of a 1989 Hyundai excel gl? I haven't yet found a website that will go back far enough in years.

Daley

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Re: Sharing another way to make some side cash
« Reply #9 on: January 03, 2013, 06:07:10 PM »
That's awesome! Anybody know how I could find the blue book value of a 1989 Hyundai excel gl? I haven't yet found a website that will go back far enough in years.

You probably aren't going to find KBB value on a car that old as they don't really deal in cars older than 20 years if I recall correctly. You need to go NADA yellow book instead, as they list old, classic and vintage vehicles as well.

TomTX

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Re: Sharing another way to make some side cash
« Reply #10 on: January 03, 2013, 07:32:50 PM »
That's awesome! Anybody know how I could find the blue book value of a 1989 Hyundai excel gl? I haven't yet found a website that will go back far enough in years.

Around here, if it's running, has working AC and no major issues (ie - passes inspection, no major body damage) - you can get at least a thousand bucks for almost any car.

Nephi

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Re: Sharing another way to make some side cash
« Reply #11 on: January 03, 2013, 11:36:29 PM »
That's awesome! Anybody know how I could find the blue book value of a 1989 Hyundai excel gl? I haven't yet found a website that will go back far enough in years.

You probably aren't going to find KBB value on a car that old as they don't really deal in cars older than 20 years if I recall correctly. You need to go NADA yellow book instead, as they list old, classic and vintage vehicles as well.

Thanks I'll check that out.

Matte

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Re: Sharing another way to make some side cash
« Reply #12 on: January 04, 2013, 12:02:16 AM »
I have had about 20 cars in my 9 years with a liscence, first one I flipped I was 14.  It works well, skipping your name has tax advantages for sure, also keeps your profile down with registration.  I know there at least in my are there are tip lines to rat on curbers, wich what your doing is called by those at the car lots.  I would be claiming the income if you did it that way as it is revenue instead of just buying a car and selling it for personal choice. 

Paul der Krake

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Re: Sharing another way to make some side cash
« Reply #13 on: January 04, 2013, 10:54:22 AM »
Hey cbr,

Not trying to call you out or anything, but how did you handle the test drive for your buyer? Did the original owner leave his plates on? Or did you put one of your plates on just in case a cop notices a car without one, or what?


cbr shadow

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Re: Sharing another way to make some side cash
« Reply #14 on: January 04, 2013, 02:21:57 PM »
Paul,
Luckily my coworker told me to leave the plates on and give them back to him the following week when he gets back from vacation.  I kept his plates on the car for the test drive.  The guy who bought the car BARELY test drove it though (literally 5-6 houses down, 3 point turn, back to my house.. total of probably 1/8 mile).

Otherwise I'd probably risk it without plates and tell him to stay right in my area.  If he got pulled over I'd just put all the blame on him since he's the driver.   Just kidding - Cops in my town are reasonable and I've done volunteer work at the dept in the past so I know many of them so I doubt it'd be a problem.

A friend of mine that does this fairly often (it's almost a family business. 2-3 cars/month with them) use dealer plates for their cars.  I have no idea on the details of using dealer plates, but his dad owned a dealer 5 or so years ago and they never register/plate these cars.