Alrighty, folks, we're going to talk about things you can do to ensure you'll make a profit when you are flipping motorcycles. The first thing we need to understand is the word EQUITY. I'm sure you've heard that term used before when it comes to homes...you know, a home equity loan and such. Basically, with motorcycle flipping, equity means the money you can make from the difference you bought the bike and the market value of the bike.
Let's take for example you are interested in a bike that will cost you $1000. The market value is $2500. So that means your profit/equity will be $1500 if you sell it. Make sense? The equity vs market value is where you can have an invisible buffer where you can determine if this deal is going to be worth it or not.
If we take the $1500 equity the bike has, but need to get a set of tires for $200, then that brings it down to $1300...right? The general rule of thumb for me is I want to make sure that any item I buy will have enough room or in this case, equity to make it profitable. I follow that 80s term that I would hear from TV shows I'd watch where the character says "Buy low, sell high!" Yep, that's pretty much how it is.
Now that we've got the idea of making sure your bike choice has equity. Let's talk about Market Value. What does this mean? Basically, it's the amount that your bike could be sold for in any given market. NADA Guides and KBB are great resources to see what the value of a bike could be. But much like with anything else, it's a supply and demand situation. The Honda Groms were super popular when they first came out. Selling for about $4k and they held their value for quite some time. I recall seeing used Groms being offered on Craigslist close to full retail...remember these are USED bikes. But now with the release of Honda's new Monkey bike (based on the Grom), the value of Groms have dropped and can now be found for $2500 or less. The point is, the market value will be determined by the demand of the bike. Just recently I was checking out a 01 Suzuki SV650, the guy listed it for $2500, NADA/KBB show the value is way lower, around $1900-$2000. Other SV650s were listed closer to $1800. So that means the market value for this particular model should be around $1800-$2000, not $2500.
With that in mind, if I were to pursue an SV650, then I wouldn't pay more than $1300 for one with a clean title and current registration. Now you're probably thinking that I won't find an SV650 for that price. Mind you, I can be a patient person when it comes to finding the right deal. Someone will eventually list one close to $1700 and it's been sitting for some time. That's when I'll engage with the seller and offer to look at it. I know most bikes are not going to be perfect, so I'll point out the things that need to be replaced and use them as part of my negotiations. Hypothetically I get the bike for $1300, market value is $2000. Then I'd put in no more than $200 to R/R the items that I think need to be addressed. Register it in my name, wait for the pink and then list it. In the meantime, I'll enjoy the bike until a new buyer is found.
The moral of the story, research the bikes you want to flip. Make sure there's a demand and when you buy it, don't pay asking price. Get it as low as you can so you can resell it for a profit. It's that simple.
Let's take for example you are interested in a bike that will cost you $1000. The market value is $2500. So that means your profit/equity will be $1500 if you sell it. Make sense? The equity vs market value is where you can have an invisible buffer where you can determine if this deal is going to be worth it or not.
If we take the $1500 equity the bike has, but need to get a set of tires for $200, then that brings it down to $1300...right? The general rule of thumb for me is I want to make sure that any item I buy will have enough room or in this case, equity to make it profitable. I follow that 80s term that I would hear from TV shows I'd watch where the character says "Buy low, sell high!" Yep, that's pretty much how it is.
Now that we've got the idea of making sure your bike choice has equity. Let's talk about Market Value. What does this mean? Basically, it's the amount that your bike could be sold for in any given market. NADA Guides and KBB are great resources to see what the value of a bike could be. But much like with anything else, it's a supply and demand situation. The Honda Groms were super popular when they first came out. Selling for about $4k and they held their value for quite some time. I recall seeing used Groms being offered on Craigslist close to full retail...remember these are USED bikes. But now with the release of Honda's new Monkey bike (based on the Grom), the value of Groms have dropped and can now be found for $2500 or less. The point is, the market value will be determined by the demand of the bike. Just recently I was checking out a 01 Suzuki SV650, the guy listed it for $2500, NADA/KBB show the value is way lower, around $1900-$2000. Other SV650s were listed closer to $1800. So that means the market value for this particular model should be around $1800-$2000, not $2500.
With that in mind, if I were to pursue an SV650, then I wouldn't pay more than $1300 for one with a clean title and current registration. Now you're probably thinking that I won't find an SV650 for that price. Mind you, I can be a patient person when it comes to finding the right deal. Someone will eventually list one close to $1700 and it's been sitting for some time. That's when I'll engage with the seller and offer to look at it. I know most bikes are not going to be perfect, so I'll point out the things that need to be replaced and use them as part of my negotiations. Hypothetically I get the bike for $1300, market value is $2000. Then I'd put in no more than $200 to R/R the items that I think need to be addressed. Register it in my name, wait for the pink and then list it. In the meantime, I'll enjoy the bike until a new buyer is found.
The moral of the story, research the bikes you want to flip. Make sure there's a demand and when you buy it, don't pay asking price. Get it as low as you can so you can resell it for a profit. It's that simple.
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