Buying and selling cars can be a way to score some extra cash every once in a while. It can also become a lucrative business if you qualify for licensing.
Most states have laws preventing residents from selling more than a certain number of cars per year. And that number usually tends to be rather low – under five vehicles. To sell more than that may require an automobile dealer’s license. And many states deny these licenses to people with felony convictions for some, but usually not all, crimes.
Although it may provide challenges, selling vehicles is still worth looking into, especially for those who love cars and trucks. If you just want to sell a handful, it’s not a problem. But for anything beyond that, you’ll have to check out the licensing requirements with your state’s DMV.
Higher priced cars usually mean higher profits
Many “how to sell cars” websites recommend buying and selling low-end cars, say those worth $1,000 to $4,000. You’ll take less financial risk selling at this price range, but you also may end up buying vehicles that need a fair amount of work before you can sell them, since they tend to be older models. You’ll also make less money than selling higher priced cars, which can offer greater markups and may be easier to fix up, especially if they are recent models with relatively low mileage.
One person who did this is Californian Charlie Lehmann. No, he doesn’t have a criminal record – or at least we don’t think he does – but his story still can be an inspiration to anyone considering doing something similar.
Lehmann began buying and selling a few Volkswagen diesel cars, and together with his son, built a successful business that netted $1.3 million in a year and a half.
That year and a half was 2004 to 2005, and Lehman was selling only Volkswagen diesel cars. He would fly all over the country – from Alaska to Florida – to purchase them and then drive them back to California.
“I would fly there, write a check, go to the bank, get the pink slip and drive back. In some cases, not a lot of cases, we’d actually wire transfer the money into the person’s account. In those days there was a big demand (in California) for the cars we were selling,” he says.
Craigslist, Auto Trader and cars.com are good places to buy vehicles
He found the cars on Craigslist, Auto Trader and cars.com and was soon selling so many – about 20 per month – that he had to recruit some of the retired members of a social club he’s active in to help him drive them back.
He also bought cars from car dealers who took vehicles that were not popular in their market in on trades. Auto auctions can be a good source as well.
Because he specialized in Volkswagen diesel cars, Lehmann got to know them very well. “It was very important for us (to specialize). It kept us focused. We knew the cars, and we were not buyers and sellers of automobiles (in general). We were limited in our knowledge space.”
Although specializing is important to get a knowledge edge, the most important thing, as far as the cars were concerned, was that they looked like new.
“I’d drive the car back. My wife would have it serviced. If the window had a pit, we’d take it in and have a new windshield put in. The car needed to look like new. If it had a ding in the door, we’d get the ding guy. They’d come out for less than a hundred bucks and get rid of the dings,” he says.
“As long as the margin was there, we’d buy them. Basically we wanted the newer cars within 1-1/2 to 3 years old, because after three years the price is substantially reduced.” They netted $4,000 on average for each of the approximately 300-plus cars they sold.
Although Lehman specialized in Volkswagen diesel cars, this business model can work with virtually any price range and type of car as long as you know what the value is and if there is a market for the car where you plan to sell it.
Because of the quality of the Volkswagens they bought, Lehmann and his crew never had a breakdown driving them back to California. There were three accidents involving animals – rabbits and a porcupine – however.
Tips for those new to buying and selling cars
Advice from Lehmann and others for people starting out:
- Specialize in a certain make of car. You’ll learn to know it well.
- You don’t need much money, except to buy your first car.
- Have a passion for whatever car you choose to specialize in. Without a passion, you can’t sell them, and ultimately selling is everything.
- Buy cars with the lowest mileage you can get.
- Make sure they look good, but it doesn’t cost that much money to fix them up cosmetically. You can do most of the cleanup work yourself, although you may want to take it to a detailer and will definitely want to replace a cracked windshield or have a professional take out the dings.
- Plan to get a dealer’s license – or work with someone who can get one – if you’re going to sell more than the number of cars legally allowed in your state.
So, if you think this might possibly be the business for you, do your research and follow the tips in this and other articles, as well as YouTube videos you find online. Here are a few examples:
Business idea for nonprofit reentry organization
This concept could also make a great business for an organization that works with people in reentry, according to Lehman. An organization could employ well suited clients to learn to buy and sell cars as a business under the guidance of an experienced manager. A car dealership might even be interested in becoming a partner in supporting such an idea by helping to share the costs and providing other resources. With a big smile and lots of enthusiasm Lehmann said, “These numbers are real and scalable, and the business is a nice opportunity for learning and profits.”