Flipping new cars can be risky business—can you make money doing it?

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Successfully flipping a car starts with having a good eye for the market so you can buy low and — hopefully — sell high. Here are some tips.

Flipping cars has been a side hustle for years as a way to make a little extra cash. But in an era of rising used car prices and online vehicle ordering, the game has changed — and the profits are much higher.

Here’s how car flipping works: A person orders an in-demand vehicle from the factory at a fixed price. When it arrives months later, the vehicle’s value rises; because of the current car market, it can be sold at a profit. See: Ford hikes price on all-electric F-150 Lightning due to shortages, inflation — here’s how much the pickup truck will cost

Kirk Dunn, a Long Beach, California, contractor took advantage of both kinds of flipping. He saw the value of his Chevrolet Silverado pickup increase so much he sold it to Carvana CVNA for a $3,500 profit. Over the following months, the market stayed hot, allowing him to purchase two new trucks, then flip them at a profit and enjoy driving newer and better models.

According to car research site Edmunds, the average transaction price for 3-year-old vehicles was $31,302 in July, a 4.6% decrease, or $1,526, compared to their peak of $32,828 in January. And then there’s the sales tax and registration fees that will cut into your profits. In California, for instance, those fees come to $5,745 for a $50,000 vehicle. That’s a big nut to crack.

 

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