How to Make Money Restoring Old Cars

George Doyle/Stockbyte/Getty Images

For anyone who loves cars, buying and selling classic cars for profit may be a dream. But there's going to be a lot of work before you can make that dream come true. Knowing how to replace a carburetor or bang out a dent in a bumper is certainly important, but much of the business of selling cars is going to be leg work — that is, finding cars at prices that you can make a profit on.

Sourcing Your Classic Cars

As Mary Wickison, a 20-year veteran in selling classic cars, points out in AxleAddict, the price you pay for the car will determine whether or not you make money when it comes time to sell. Buying a '66 Mustang for $42,000 is going to cost you money before you even start if you can't find a buyer who will pay your cost plus the parts and labor you invested.

So the key to a profitable business is keeping your original investment as low as possible. There are several ways to find good deals on used cars, but kicking tires at car shows isn't one of them.

Barn Finds: Classic cars stored away in a barn for a couple of decades are rare treasures for car enthusiasts. Kept out of the elements, often kept under a tarp, these can be in great condition, though probably quite dusty.

Hobbyists: Most men, and quite a few women, have thought about fixing up an old car and flipping it, but not everyone has the time, patience or resources to get the job done. Their forgotten projects can be a great source for cars that were rescued years ago and kept safe in a garage.

Repair Shops and Scrap Yards: Like the half-hearted hobbyists, there's a chance you will find a classic car that has been set aside in these places. The owner is offered an old car for a cheap price and decides he might fix it up, only to postpone the project indefinitely.

Networking and Advertising

Driving around hunting for cars can be a time-consuming endeavor — fun for a hobbyist, but a time-killer for a business owner. (If you do have to hunt for cars yourself, Wilkinson suggests using Google Maps' satellite view or even using a drone to scout the countryside.) Advertising and networking, however, will be a much more productive use of your time.

Let everyone know what business you're in, even if it's not a full-time business yet. Hand out business cards and when you do go to the car shows, consider wearing a t-shirt advertising your business. Antique dealers, pickers, mechanics and car enthusiasts should all be in your networking circle. In fact, if a farmer does have a classic car hidden in his barn, it's unlikely you'll find out about it until you talk to him or make friends with someone who knows him.

Place an ad in Craigslist letting people know that you'll pay cash for an old car. You may get a lot of calls and emails from people hoping to make a profit from you, but you should also get calls from people who just want someone to take the car off their hands for a half-decent price.

The Business of Buying and Selling Cars

Chances are you've already fixed up a car or two and sold it, but as your business gets off the ground you will want to register your company, such as a sole proprietorship or LLC. You will also need to get a dealer's license from the state and register your company for tax purposes.

The requirements for dealer licenses vary in different states, usually depending on how many cars you sell each year. Requirements also depend on who will be buying your cars, consumers or other dealers. In Texas, getting a dealer's license means you need to get bonded. A $25,000 surety bond, however, may only cost you $250.

Keep track of all of your receipts and log the miles you put on your own car while going to see cars or hunt for cars because you can deduct expenses and mileage from your taxes. And finally, do your research before investing in a car to see how much it will be worth on websites like CarsForSale.com and AutoTrader.