UPDATE: Sorry for the long hiatus. Life got in the way over the past 8 months as I changed jobs/careers, moved into a new house and, of course, bought and sold a bunch of junk.
This was probably one my more boring flips but I still made a profit and some valuable lessons for future flips. While trying to flip several cars at the same time, purchasing another car to flip is not very smart. But when a deal falls in my lap, I can’t pass it up.
Of course as any flipper knows, do your due diligence beforehand. Find out the value of the car, know what questions to ask before setting up an appointment to look at the car, etc. Every hour spent doing research will help you determine if the work to purchase the car is worth the reward and that’s the lesson learned from this flip.
The car was a boring and common 2002 Mercedes C240 sedan. Nothing special at all. Unless you count the cassette player loaded with Prince’s Purple Rain album (great album by the way). The car had 240k miles, (all highway of course), it had some bumps and bruises from prior incidents and the rear glass was busted out. I discovered this car on ebay. I didn’t purchase it on ebay though. I watched the auction for several weeks as it was relisted over and over. Each time it was relisted for a lower price. I contacted the seller and he was very local to me so I arranged a time to check it out in person.
We met up in a neutral location and we discussed the car. I test drove it around the block and took note of any lights on the dash, squeaks or unusual sounds and other items that I could use to negotiate a lower price. The car was in decent condition but not good. There was a large dent in the passenger rear door and the window would not roll down because of the damage. As previously stated, the rear window was busted out and replaced with cardboard and duct tape. A warning light was on for alternator output. I asked questions like “Has it been in any accidents? Does it have a clean title? Why are you selling it?” These questions helped me paint a picture of why he is selling the car and also establishes a relationship with the buyer.
After my test drive and inspection, I knew what I wanted to pay for the car. My research said that the car was worth $2500-3000 in good condition. Since this car was not in good condition I started adding up the costs of the items that needed repair in order to get it to good condition. I called a glass replacement shop and they wanted $300 to install a new glass. A loaded door (with window motor/regulator, switches, etc) was $50 from the local junkyard. A new alternator was about $200. In my head I didn’t want to pay over $800 for the car in order to make the profit I wanted. Also, add in the fees and taxes to transfer the title (approx. $200). The car was listed at $1000 in ebay and received no bids when it ended so I figured he would take less than that. I asked him how much he wanted and he said $1,000. I always try to get the other person to say a price first because as a buyer I know the price can only go down from there. I countered with $500. He said that was too low. I walked around the car one more time and offered $600. He said he would come down to $800. I walked around it again and said the highest I can offer is $650. He said no, that was still too low. We talked for a few more minutes and I let him know that was my best offer and good luck with the sale. I headed home and 20 minutes later, I got a message from the seller saying $650 is a deal. I was excited that because I stuck to my original offer I was able to get a great deal.
We met up the following night and I drove the car home. I immediately began the process of cleaning the interior and exterior of the car to make it more presentable. I had a rear glass installed and scored a matching color door with no dents or scratches from the junkyard. The door took 30 minutes to replace and everything fit perfect. The door panel was a different color than my car so I swapped those to match. I later sold the unused door panel for $50 on ebay and broke even on the door replacement.
I addressed a few other things such as changing the air filter and cabin filter which were beyond dirty and overdue. I steamed cleaned the carpet to remove the stains and replaced a couple of switches and bezels that were worn out or cracked with used pieces from the same donor car in the junkyard. The alternator issue wasn’t really an issue as it was putting out the correct voltage but an online forum said that sometimes when aftermarket alternators are install instead of OEM parts they can cause a warning light to trip. My buddy and I spent a few hours buffing the paint, removing smaller dents with a PDR and filling in scratches with a color match paint pen from the local parts house.
I then listed the car on Craigslist, Facebook Marketplace, and parked it out front of my house by the road with a for sale sign showing $2999. I had a couple of inquiries within days but no serious buyers. After 3 weeks, a nice older lady purchased the car for her daughter who had just totaled her car and needed a replacement. We agreed on $2600 and she drove the car away the next day.
BOTTOM LINE
Cost of Car – $650
Title Transfer & Taxes – $200
Door – $50 (later sold donor door panel for $50 on ebay) – $0
Switches and Bezels for Interior – $25
Rear Glass Replacement – $300
Misc Maintenance Items – $30
Total Investment – $1205
Sell Price – $2600
Profit – $1395
Lessons Learned:
– Do your research and know the value of the car. Set a maximum price you are willing to pay and stick to it.
– Junkyards are your friend. They offer OEM parts at a great price. Thanks to the internet I already knew the local yard had several of the same model car on the lot. (Admittedly I was lucky to find one in the same color as the car.)
– Sell the anything you don’t need. Like to door panel mentioned above, I was able to sell it on ebay and break even on my door purchase.
– Ask the right questions before you waste your time. Due diligence goes a long way in saving your time for cars that you can immediately profit from vs wasting your time on cars with tight margins.
