# Flipping over cars



## Tyler Durden (5 February 2014)

Hi all,

I know someone trying to offload their car at what I consider to be a bargain price. Their reason for not selling it at a higher price is they can't be bothered advertising and they want to sell within a few months. They have approached a dealership and they are asking for anythig more than what the dealership is offering.

I am thinking of getting a loan from the bank to buy it with the sole intention of selling it for more.

Has anyone done anything similar before? Is it worth the trouble, and does the bank care that I only want to sell it?


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## skc (5 February 2014)

Tyler Durden said:


> Hi all,
> 
> I know someone trying to offload their car at what I consider to be a bargain price. Their reason for not selling it at a higher price is they can't be bothered advertising and they want to sell within a few months. They have approached a dealership and they are asking for anythig more than what the dealership is offering.
> 
> ...




That sounds like a lot of trouble?! How much gain can you expect? Are you fairly knowledgable in terms of cars so you can be sure that it's not a lemon? 

Obviously there are transaction costs (mechanic checks? advert to sell), holding costs (rego, fuel, insurance), finance costs etc so make sure you've allowed for them properly. And remember you may not get them all back when you sell if you say extend the rego period.

The bank probably wouldn't care about you flipping it, as long as you financially qualify for the loan in the first place.

What's the risk:reward for such a trade? I can't imagine it being super awesome. Unless it's a Ferrari or something...


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## skyQuake (5 February 2014)

If you know the other guy, you might be able to sell it for them, and take x% cut above $y

Let them keep the risk


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## burglar (5 February 2014)

Tyler Durden said:


> ... Has anyone done anything similar before? Is it worth the trouble, and does the bank care that I only want to sell it?




I did buy cars with my brother.
We went to auctions.
I provided the finance.
He provided the picking skill.

Mechanic by trade, he tried to pick a car on the basis of:
a.) Popularity i.e. easier to sell.
b.) Mileage, age.
c.) Apparent mechanical condition.
d.) Price.

His commercial advantage was that he could repair a vehicle if necessary.

It went Ok for a while.

If you intend to do this long term, be prepared to lose your scruples.


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## Smurf1976 (5 February 2014)

It can be done but like anything would require some knowledge and skills.

I know a couple of people who do something related, that is to achieve very cheap car ownership costs which are basically limited to petrol and insurance only. They change cars often, always selling before the rego runs out, and never spend a cent on maintenance unless it can be recovered via a higher selling price. 

End result of all that is driving a reasonably modern, say 6 or 7 years old, car at no cost other than petrol and insurance. The car itself is essentially at no cost (other than the opportunity cost of the money tied up in it) and someone else ends up paying the maintenance and rego costs.

Basically, it's a buy low, sell higher strategy. You buy a car that has, say, 11 months rego remaining, drive it for 9 months, then sell it at the same price you bought it for thus giving you effectively no maintenance or rego costs. 

How to go about it I really don't know the details, but I know a couple of people who have done it. Apparently one of the keys is the location of purchase and sale - depending on the type of vehicle you'd be wise to buy it in one state and sell it in another. Or buy it in the city and sell it in a regional area or vice versa.

I know someone else who has flipped boats in the past and again they are buying and selling in different locations. This was a true flipping exercise, the boats never went in the water between purchase and sale. Note that when I say "boats" I mean the kind of boat you put on a trailer and tow with a 4WD etc, I don't mean large ships etc.


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## Value Collector (5 February 2014)

I thought this thread was going to be related to parkour, lol:


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## Calliope (5 February 2014)

Drunken street hooligans often try to flip cars over as a test of their steroid induced muscles.


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## Bill M (5 February 2014)

Tyler, I've done it but you got to factor in all costs and be sure of the current selling prices. Run a search for the exact model and year on carsales.com.au and carsguide.com.au and then compare it to the Red Book price. Once you have added on all your extra costs see if it is worth it. Whenever I value a cars worth I look at the lower price of the Red books prices and then compare with what's on sale.

I recently had a lot of trouble selling a 19 year old car and eventually had to let it go for $600. You can win if you do your homework but what if things go wrong and no one wants it for the right price? I have also found it easier to sell cars in the city than regional areas, no one really wants to travel too far to look and you are limited by numbers looking in regional areas. Good luck anyway.


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## burglar (5 February 2014)

Value Collector said:


> I thought this thread was going to be related to parkour, lol:




Just because flippancy is expected, ...


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## Smurf1976 (5 February 2014)

Bill M said:


> I have also found it easier to sell cars in the city than regional areas, no one really wants to travel too far to look and you are limited by numbers looking in regional areas. Good luck anyway.




Another factor is the type of car. Selling a small 4 cylinder hatch or a sports car in the city is going to be a lot easier than selling it 1000km away in an area where utes and 4WD's are the vehicle of choice.


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## burglar (5 February 2014)

Smurf1976 said:


> Another factor is the type of car. Selling a small 4 cylinder hatch or a sports car in the city is going to be a lot easier than selling it 1000km away in an area where utes and 4WD's are the vehicle of choice.




Red Mitsubishis are hard to sell ... apparently.


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## Melthar (6 February 2014)

burglar said:


> Red Mitsubishis are hard to sell ... apparently.




I'll take 4 if you have them.


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## sptrawler (6 February 2014)

Like most have said, selling cars isn't as easy as it was say 5 years ago. 
In real terms cars have dropped a lot, we are becoming like the U.S, they are just consumables now.
Mate traded a 2010 Ford Focus disel,got $10k.


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## Calliope (6 February 2014)

Gogomobiles are very flippable.


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## Smurf1976 (6 February 2014)

sptrawler said:


> Like most have said, selling cars isn't as easy as it was say 5 years ago.
> In real terms cars have dropped a lot, we are becoming like the U.S, they are just consumables now.
> Mate traded a 2010 Ford Focus disel,got $10k.



Cars are certainly getting cheaper in real terms. For many types, the nominal price today is pretty much the same as it was 20 years ago and that's a huge fall in "real" terms once you take wage / salary rises over that time into account.

That reality was brought home in a big way when a friend sent their late 1990's car to the wreckers for no reason other than that the engine had worn out. For the cost of a new engine, they were better off selling the old car for scrap and buying a car with a decent engine in it and so that's what they did. Even something like an electronics failure can see an otherwise good car effectively written off these days as uneconomic to repair.

My own car is 14 years old. Exterior bodywork is average, the paint is fading slightly, but it's in mint condition inside - looks as though it just came out of the showroom. And mechanically it seems to be fine too with only a bit over 80,000 km on it. It could easily last another decade or more with the amount that I drive it, and I have no intention of selling it for the foreseeable future. But I'm very aware that should it be involved in anything more than a very minor accident then it would be written off as uneconomic to repair. 

Go back to 1990 and there were still plenty of 1960's cars on the road and it was quite common to see older vehicles. Take a look around now and there aren't many cars over 20 years old still on the road since once something happens to it, either an accident or serious mechanical problem, it's just not economic to repair them these days. 

Slowly but surely, cars are going the same way as whitegoods, electronics and so on. There used to be a significant industry repairing washing machines, TV's and so on but not anymore. Even vacuum cleaners were commonly repaired in the past if they broke down. But these days, if it's out of warranty then it's not worth repairing in most cases unless you can DIY thus avoiding labour costs. Cars are slowly heading the same way.


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## Assasin (6 February 2014)

Having spent well over 2 decades owning dealerships with 20 of those years as a valuer, I reckon I have seen most things. 
The aspect that presented most challenges was when ambition got mixed up with ability, ability to repay that is.

Here's the popular scenario. Young lady falls in love with a new little 3 series BMW (just an example), 1 year old, 18500km, saving $11500 of new price.  Bargain!!!! So the price is $42500 and she trades in her prized Toyota Corolla getting $5000 for it and borrows the rest.
6 months later she's ringing me asking for an evaluation as she can't keep the payments up and wants to down grade.  She becomes furious with me after I explain that her car is only now worth $30,000 because she still owes $37,000 on it as she has barely touched the principle. 
What I'm trying to express is that these cars are depreciating a lot faster than you can pay them off and this example is a very common one.
She is now stuck in her loan, now hates her Beamer and the longer it goes the worse it gets unless she can ride it out for the remaining 54 months.  Oh, did I mention the maintaining of said vehicle???? 

Cheers


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## sptrawler (7 February 2014)

Assasin said:


> She is now stuck in her loan, now hates her Beamer and the longer it goes the worse it gets unless she can ride it out for the remaining 54 months.  Oh, did I mention the maintaining of said vehicle????
> 
> Cheers




Thanks for that insight Assasin, I have a friend who owns a radiator business, he is dying by a thousand cuts.

He thinks the 'good old days' are just around the corner, I try not to hurt his feelings. But tell him that the days of repairing radiators are fast coming to an end.

With todays anti corrosion additives, the car is stuffed and worthless before the radiator fails.

The only cars getting new radiators are commodores and falcons, because people hang onto them.

When they go out of production, people will be flipping cars when the warranty runs out.

You can buy a new car for $11k.

When I was a boy,lol, it cost nearly as much as a house to buy a car.
But I'm really old, in my late 50's.

It has never been more important, than now, to buy a vehicle with your head not your heart.IMO


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## banco (8 February 2014)

Assasin said:


> Having spent well over 2 decades owning dealerships with 20 of those years as a valuer, I reckon I have seen most things.
> The aspect that presented most challenges was when ambition got mixed up with ability, ability to repay that is.
> 
> Here's the popular scenario. Young lady falls in love with a new little 3 series BMW (just an example), 1 year old, 18500km, saving $11500 of new price.  Bargain!!!! So the price is $42500 and she trades in her prized Toyota Corolla getting $5000 for it and borrows the rest.
> ...




Without exception the women that own bmws at my work are young admin assistants who live with their parents.


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## Value Collector (8 February 2014)

Assasin said:


> She is now stuck in her loan, now hates her Beamer and the longer it goes the worse it gets unless she can ride it out for the remaining 54 months.  Oh, did I mention the maintaining of said vehicle????
> 
> Cheers




Yeah, and then by the time the car is no longer "Good" enough to impress her friends and she wants to buy a new one, She has no savings for a new one because she has been making payments on the old one.

Hence most people live their life making car payments.

I find they concept in the video below brilliant, ( I know it doesn't factor in taxes and the interest rate used is probably too high, But the concept itself is a great way to set yourself up.


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## Tyler Durden (10 February 2014)

Turned out to be a false alarm - I had mistakenly assumed the engine capacity was larger, but it wasn't, hence the price.

However, there's been some great info in this thread, so I can we can all keep it alive


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## Tyler Durden (28 January 2015)

Value Collector said:


> Yeah, and then by the time the car is no longer "Good" enough to impress her friends and she wants to buy a new one, She has no savings for a new one because she has been making payments on the old one.
> 
> Hence most people live their life making car payments.
> 
> I find they concept in the video below brilliant, ( I know it doesn't factor in taxes and the interest rate used is probably too high, But the concept itself is a great way to set yourself up.





Does anyone recall the above video? I remembered watching it, but can't remember the name or anything, and now the link is dead 

Trying to look for a substitute one, either on youtube or somewhere else, but just can't remember any key words.


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## Smurf1976 (29 January 2015)

sptrawler said:


> He thinks the 'good old days' are just around the corner, I try not to hurt his feelings. But tell him that the days of repairing radiators are fast coming to an end.
> 
> With todays anti corrosion additives, the car is stuffed and worthless before the radiator fails.




Same with most aspects of vehicle repair. There used to be plenty of workshops doing standard (not modified) engine rebuilds and supplying reconditioned engines for installation in standard vehicles. These days, it's really only the modified / performance market that still exists, for any standard unmodified vehicle the engine and most components last the life of the car. By the time the engine does die, the rest of the car is worn out and pretty much worthless so there's no point putting a new motor in.

Slowly but surely, cars are becoming an appliance like anything else. Unless you're an enthusiast not driven by economic considerations, it's just not worth major repairs on an older vehicle for the average person who just wants to get from A to B.

My car is 15 years old and I'd be quite happy to keep driving it for another decade or more. Interior is in like new condition, mechanicals seem fine, exterior paintwork shows its' age on the bonnet but isn't too shabby overall. But I'm well aware that even a modest accident would see it written off as uneconomic to repair these days.


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## Newt (29 January 2015)

Tyler Durden said:


> Does anyone recall the above video? I remembered watching it, but can't remember the name or anything, and now the link is dead
> 
> Trying to look for a substitute one, either on youtube or somewhere else, but just can't remember any key words.




I think it was this one Tyler?

https://www.youtube.com/watch?v=BKyV8CTHeJ0


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## Tyler Durden (2 February 2015)

Newt said:


> I think it was this one Tyler?
> 
> https://www.youtube.com/watch?v=BKyV8CTHeJ0




Thanks Newt! The video was different but the concept was the same. Brilliant!


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