Supplementing your income is possible, but it will take some time and effort. Still, why not do something that you actually like and doesn’t require you to drop your day job.
If you know everything there is about Ford Mustangs, MG Midgets or BMW M3, why not trade used cars on the weekends to supplement your income and rekindle your passion. Obviously, all business involves risk, so if you’re not willing to lose your money, then you’re better off leaving it in the bank. But we think these tips will help you maximize your profits.
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1. Buy Low Sell High
It might sound like we’re stating the obvious, but if you want to maximize your profits, you’ve got to buy a car as cheaply as possible and sell it for the highest amount of money. To do this, emotions need to be taken out of the equation; you can’t simply buy a car that you like in the hopes of finding the right person to pass it on to.
Just like the stock market, the used car market has a bit of an ebb and flow to it. Usually, both used and new cars are tricky to shift in the January to March period, which means it might be a good time to pick up a bargain.
Cars are connected to everything else that is bought using large amounts of money, so if a housing or banking crisis is on the way, expect people’s desire to buy automobiles to suddenly drop. When the 2008 financial crisis became widespread in the media, people advertised their motors for as little as half of what they were worth just to ensure they wouldn’t be swamped by their bank loans. They say hindsight is 20/20, but we think you’ll agree that was a bad idea.2. Go Online
The days of dodgy car dealers and quick talking scammers are mostly behind us. Going online could yield much better finds than sifting through the weekly magazines in the hopes of finding. Of course, you still need to visit the car you want to buy and check if the description was accurate, but online auctions provide huge benefits.
For starters, since more cars are advertised online than anywhere else, the market is fairer and less prone to wild fluctuations. Some online auctions provide statistics about the average prices some cars sold for during a year, which can prove very helpful.
In addition, because there’s such an abundance of cars on eBay you’re pretty much guaranteed to find a bargain nobody else sees once in a while.3. Trust Your Instinct
The blinking of an eye and the fidgeting of fingers has nothing to do with the nuts and bolts of an automobile, but you should always trust your instincts. If something doesn’t feel right about the way a seller is acting, just walk away.
If you’ve missed out on a good deal, you can always call him again, but if you’re right you could save yourself a lot of headaches.4. Check Twice, Buy Once
The most desirable cars on the planet deserve their status because they are fast and fun. That’s why most have probably been street-raced and could have sustained major damage. A few dings here and there are a good indication of a honest car, but always take your car to a mechanic you know and have it checked out for rust and structural problems.
Buy with your head. Always inspect every fault and consider how much it would cost to put right. If it’s more than what you’re going to make in the end, walk away.5. Stay Away from Complexity
The difference between a $500,000 and a $1 million home is in the fit and finish. It’s basically the same story with classic cars, which is why you should stay away from the more complex cars out there.
A faulty window powered sunroof switch could give your buyer just the leverage he needs to pinch your pennies away. Cars like the old BMW 8 Series might seem like V12 performance bargains of the century, but they’re really not. One faulty engine management computer could cost you more than the car itself and turn it into a total write-off. Which brings us to our next point…6. Life in Classic Is Fantastic
New cars tend to lose at least 40% of their value within the first three years. That means that if you buy a used VW Golf, it could lose 10% of its value by the time you sell it.
Classic cars are a different story. They’ve already done most of their depreciating already. Some have said that buying these retro automobiles is a better investment than gold. That can only be true if you know what you’re doing.
We think the key is to look for the modern classics right before they get their status. The best way to do this is to check out major tuning shows. If for instance the old VW Scirocco make a huge showing at the Worthersee GTI Meet, you know what to look for.7. DIY
Probably the biggest way to make a profit in the used car business is to take out the spanners and fix things yourself. Specializing in VW Beetle service and maintenance for example could make the difference between doubling your investment and going broke.
This comes with the added benefit that if the job is done right, you might get a profitable call from your client a few years to service that Beetle once more.8. Multiply and Think Bigger
Say you’re a self-employed car mechanic. You make money by the hour fixing people’s cars. If you hire somebody, that basically means you’ve doubled the amount of profitable hours your have. Most of the time, this means you’re going to make more money. It’s the same selling cars.
If you’ve learned everything there is about say the VW Golf V from a previous successful sale, than you need to capitalize and increase your success by doing that once again.
You did a lot of work on your first car, learning how to take the trim off to change a light bulb or how to change out a radio CD player for a navigation system. So the next time, you’re going to spend far less time because you know what you’re doing.9. Failure Is an Option
Business is business, so failure is going to inevitably happen. Don’t let yourself be bummed out by that one time you bought a lemon and find the best way to quickly change your luck.
Nobody likes to fail. To a person who want to be a little bit more successful in life, failure is gut-wrenching.
But as long as you keep your business small and do buy used Ferrari and Lamborghinis, you’re going to be OK. In the worst-case scenario, you’ve taken two steps back and need to rethink your strategy.10. Talk to People, Advertise
Owners’ clubs know pretty much everything there is, from where to find the cheapest spares to what model years to avoid and which to seek out. They know what it takes to refurbish spokes on the E-Type Jaguar and how to fit a non-original Ford Mustang bumper.
They’re also the best people to talk to when you want to sell a car. Advertising is just as important as buying and fixing. Inside information about specialist auction sites for classic cars can prove to be a life saver. Whichever website you chose, always go for the best quality photos to attract the most buyers.
We hope this article inspired you to go out there, combine your work and your hobby and supplement your income.