Posted by: admin | October 2, 2008

Flipping my 2001 Honda Accord EX Coupe

A few months ago I was searching for a new car on craigslist and stumbled across a 2001 Honda Accord EX Coupe for sale.  It had 84k miles and was listed for $6,000, which seemed unusually low to me.  I quickly looked up its Kelly blue book value, which returned ~$8,300 in good shape, and ran a carfax report which turned up a clear title with no accident.  I phoned the owner and arranged to test drive it that day.

When I arrived I inspected the vehicle and test drove it, and to my satisfaction it appeared to be in okay shape but needed new brakes.  I negotiated with the owner and agreed to buy it for $5,700, which I paid him in cash.  I then drove it straight to Midas and had them put on new rotors and brake pads that cost me ~$350, bringing my total cost to $6,050.

I’ve been posting it on craigslist for sale the past few weeks at a price below KBB at $8,000 and have had about 4 people come test drive it.  So far I had one offer at $7,700 but I declined it thinking I can hold out for at least $7,900.  Problem is the other interested people never made an offer so I’m kicking myself for not selling it over a measly $200 price difference, which translates to about 2.5% of the purchase price. Doh! Next person to offer $7,700 or more I will accept.

Summary

$7,700 (assumed selling price) – $6,050 (purchase cost) = $1,650 profit

$1,650/$6,050 = 27.3% return, over about 4 months, which translates into an annual rate of return of 81.8%.  I’ll take that any day, especially in today’s economy with the beating the stock marking is taking.

In my net worth update below, the value of the car is listed $5,600 because I booked the asset at cost and have accounted for depreciation for the 4 months that I’ve had it.

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Responses

  1. Did you have to pay to transfer title or to get it registered, and insured for the time being?

  2. I don’t drive the car now b/c I have another, but my current insurance covers me for whatever vehicle I drive, if I need to take it somewhere.

    I have the title in hand, but haven’t switched it over to my name or registered it since I don’t drive it. I’m pretty sure this is fine as long as you don’t drive the car.


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