Buying a salvage car, repairing it and then reselling it in the market seems like a profitable way to make money. This process is also known as flipping a car which is quite similar to flipping a house in real estate. By using smart repair and flip techniques, salvage cars can be turned into valuable investments. However, like any other business venture without the right knowledge it can easily turn into an unexpected loss. If you are considering fixing and reselling a broken car for profit then you should know about the important factors that come into play. Let’s discuss it in detail.
What Is a Salvage Car ?
Any car that has been severely damaged in an accident like flood, fire or any other event. It doesn’t mean that the car is destroyed beyond repair, it only means that the repair will cost more than the worth of the car . Therefore it will just become more expensive for the insurance company to fix it.
Where Can You Buy a Salvage Car ?
You can find salvage cars at cash for cars companies that buy old and broken cars and then recycle or resell them. Written off cars are also sold at salvage auctions to people who might want to restore them. These buyers can be mechanics or car enthusiasts looking to restore an old car.
Things To Consider While Fixing And Reselling Salvage Cars
Reduced Purchase Price
Salvage cars are an appealing investment since their initial cost is much lower. These are damaged cars and you can buy them at half price of what they would cost normally. Since you have to invest less money at the beginning, you will have more room for profit once the call is flipped and resold in the market.
Repair Costs
While the initial cost is minimal the repairs can be quite costly. If you are a skilled mechanic yourself or have access to cheap labour then this can be an ideal situation for you since you will not have to spend a lot of money in hiring a professional mechanic to do the work for you. Car parts and professional help are very expensive and these added up with the time spent in the repairs, it can all affect the bottom line.
It is also important to evaluate the damage carefully before buying the car so you can get an estimate on the cost of the repairs. Cosmetic damage like dents and scratches are cheaper than mechanical problems. Significant damage could result in higher repair costs and a lower final sale price. Certain car components may be expensive or difficult to locate.
Hidden Damages
The biggest risk of buying salvage cars is hidden damage. You might not see it initially but after buying the car you may discover that there are major issues with the car components like engine or electrical system. These hidden issues can increase your overall budget and decrease your potential profit.
Time Investment
This is another factor that plays an important part in the whole process. Flipping a car is not a quick process and will require a certain commitment from your side in order to finish the project. It takes time to diagnose the problems with the car, order the car parts and then do the repairs. It can take a few weeks to even months to finish all the work.
It is a possibility that by the time to finish the project the market demand can fluctuate and the car’s value might drop. This can put you under a great loss.
Resale Value
The resale value depends highly on the market value and the automobile market keeps fluctuating. You need to stay up to date with the market trends and make sure the model you are repairing is in great demand in the market so that customers would be willing to buy it.
Even after fixing the car you cannot sell it for its original price as a clean-title car. The car will still be a used car that can make the car less appealing to the buyers. People may also be hesitant about buying a car that has been in an accident in the past.
Legal and Insurance
You need approval from NSW Transport before repairing a written-off vehicle and you will have to go through the process of getting it inspected and apply for a Written off Vehicle Register to make the car roadworthy before bringing it back on the road again. This also involved a fee and a waiting period.
In addition some buyers might face trouble getting insurance coverage for a salvage car which will make it difficult for you to sell the car.
Conclusion
If you have the skills required for flipping a car then repairing a salvage car can be profitable for you but if you come across some hidden damage or do not find a buyer because of the car’s salvage title then you might end up selling the car for less than what you invested.
You need the skills, patience and investment to make this business venture a success. Make sure you do your research properly if you are planning to get into the salvage car business.
