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Possible Hobby Idea?


Ryans09G8
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Hey guys,

So my fiance and I are toying with the idea of buying a used (very used) honda/toyota, detailing it, then re-selling to try to make a few extra bucks on it. Purely as a hobby/interest, not because a 2nd source of income is needed.

I would search for cars known for their reliability and gas mileage, no major mechanical defects, decent tires, and low/no rust and decent paint that still has the clear coat. I would then detail it and post it for sale for a couple hundred more than what we paid.

To anyone that has done this type of flipping, do you have any pointers for me? I do not want to spend money on engine repairs, tires, or anything major as that deducts from the potential profit. Is there anything I should watch out for? Basically, I am open to any and all advicesmile.gif

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Make sure you read up on your state laws. I believe there is a limit to how many cars you can sell without a proper license. I don't know anything about it, but do know there is a limit.

 

Also don't know how hard they actually enforce the law or if there are any loopholes or whatever.

 

Just wanted to make you aware and see if this causes a problem.

 

I know a few guys that started flipping cars and they became obsessed supposedly and now own a luxury/exotic used car dealer and do well for themselves.

 

Would be fun to do what you're talking about.

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Good call BKazzle!  I'll look into that!

 

This idea all came about because I love watching all of those car shows (Chasing Classic Cars, Wheeler Dealers, Top Gear UK, Mecum, etc.) and I thought it'd be pretty awesome to get a foot in and start figuring out how to get in the business. 

 

I know it's mainly hopes and dreams, haha, but it sounded like a fun idea and my fiance is completely on board!

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Be picky on the color of the car also.  Some pop more than others. 

 

You might find a local mechic that can give it the once over for you for $25-$50,  That might keep you from grabbing a money loser. 

 

Tire wear is also a deal breaker for many buyers. 

Edited by Feets31
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There's plenty to say about this. I've thought about doing this myself but I can't sell a car in good consciousness to someone without letting them know what all was in need of repair and I've got enough background with a wrench to identify problems just through a test drive. It's not a bad idea but be mindful that you may run into issues with selling a car that breaks down the first week with the new owner and having to deal with that.

 

Also understand that if you do keep flipping them the odds are against you that you'll lose money on at least some of the cars. There's too many things with a car that can go wrong without in depth analysis. You could take one home and the alternator go out the next day taking the battery with it for example.

 

There's also the matter of taxes. If you generate too much income and don't report it you could get fined if caught. There's a cap to how much you can bring in without reporting but I don't know it off the top of my head.

Edited by DonJuan692006
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The only view I have on this is if you were selling these cars to people on Adams forum you would probably do quite well. Most people do not care if there are swirls all over their car. Walk into a Walmart parking lot and out of the 1000 cars on there very few would be in the shape your car is in. I read somewhere on the forum where one of the detailers offered their service to used car dealers and that most of them said no.

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Also... Are you going to be registering and tilting these cars? That would eat up a lot of potential profit. If you're not going to register/title them then you need to figure out a legal way to get them home, let people test drive them, etc -- that may involve getting a dealer license. And of of course your insurance company may have some concerns/limitations to all this. Not trying to discourage you, but think these things through before you leap.

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Also... Are you going to be registering and tilting these cars? That would eat up a lot of potential profit. If you're not going to register/title them then you need to figure out a legal way to get them home, let people test drive them, etc -- that may involve getting a dealer license. And of of course your insurance company may have some concerns/limitations to all this. Not trying to discourage you, but think these things through before you leap.

 

This was going to be my comment. I know in CO its extremely cost prohibitive to do this, we have ownership tax, sales tax, emissions (on parts of the front range), and registration, some folks float the title (not exactly legal some get away with it some get in trouble). I used to live in MI and a temp registration wasn't to costly, might be the same in IL.

 

Also remember from a tax stand point if you're classifying it as a hobby you can only write off up to your total expensive for the hobby, and writing off a larger chunk will more than like cause the IRS to audit, talk to your account about hobby income before starting. And your insurance agent for coverage options while you have possession of the car and look into the garage keepers liability.  

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Great advice from everyone, thank you so much!  I'm definitely not leaping without thinking;)  It was just an idea that I was wondering how feasible it might be.  Kind of looks like I should just stick to my current hobbies and not try to morph them into something like this, heh.

 

I sincerely appreciate the feedback from you guys!  Such a wealth of experience here!

 

Ryan

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