Have you thought about starting a business but maybe lack funding or even a great idea for a business? There is one business you can possibly start today using what you already have. And it is scalable. Plus as it grows, you may be able to drive cool cars you like and call it a business expense.
AirBNB for cars
If you have not heard of Turo.com by now that’s okay. The same thing could have been said about AirBNB a decade or so ago and now it is a well-known business and is preferred by many travelers.
Turo is similar to the AirBNB model except it involves vehicles. It is basically a car rental business. You can start with the vehicle you already own, assuming it is somewhat decent. You may not have much success if it is an old, rusted-out beater. Not that there’s anything wrong with that type of vehicle. I drove one for many years. But it is not likely that someone else would want to pay to rent it.
I first heard about Turo many years ago and thought it was dumb. I didn’t want strangers driving my car. Then I heard Scott Trench from Bigger Pockets mention that he rents his car on Turo when he is not using it. That got me thinking. You can set your own schedule of when it can or cannot be rented. So instead of it just sitting in your driveway, not being used, you can make some money off of it.
Today, Turo is a thriving business helping many people achieve their dreams and becoming a full-fledged business. They start with one, usually the one they already own, then buy another with the sole purpose of using it for the business. But with the perk that they get to drive it also. Then scale and buy more. The great thing is that you don’t have to buy NEW either. You can buy nicer used vehicles as well. Depending on where you live some types of vehicles will do better than others.
If you are in Los Angeles, you may do best with either gas-friendly vehicles or with fancy sports cars like corvettes or something. If you are in a more mountainous area, perhaps Jeeps will do best. You can always have a mix of all of vehicles if there is demand. A minivan may be what is best in a tourist area like Orlando. Where I am located, off-road vehicles and trucks will probably have more success.
People having success
There is a couple in Colorado who almost exclusively use Jeeps for their business. There is a guy in Las Vegas who is just starting out with used vehicles and has a mix, as his business grows he buys better vehicles. The beauty of this business is that it does not require a lot of capital to get started. Start with what you have and what you can afford and expand as needed. The real limitation is going to be where you park them all. If you don’t have much parking space you may need to figure out a solution. Eventually if you expand to 10 vehicles you may be able to move into an actual commercial space to publicly present your business just like you see for the national car rental places.
Check out some of the stories on Turo’s website : Build a small car sharing business | Turo car sharing marketplace
Results will vary depending on where you are located. I would not expect a tiny town in the middle of nowhere to do as well as a major city with a major airport hub. So if that is your situation, you may need to think outside the box to figure out a solution. Maybe have someone you know in the major city help you oversee the business. You do all the scheduling and just have the friend hand over the keys.
Just like AirBNB, one of the biggest factors that will influence your success is the customer reviews. Be sure to keep the vehicles well-maintained. If you have vehicles that break down or have brakes that don’t work, you will have trouble getting more business. And of course, keep the vehicles clean, inside and out. Especially now when we are still in a time of Covid-19, you have specific cleaning protocols that have to be done to ensure the safety of your customers.
How Much Income Can I Expect?
What kind of income can you expect? Here is what Turo shows as the average annual income based on the number of vehicles:
$10,516
Average annual income of 1 car*
$31,547
Average annual income of 3 cars*
$52,579
Average annual income of 5 cars*
$73,611
Average annual income of 7 cars*
$94,642
Average annual income of 9 cars*
* Figures represent the average Turo earnings among all US-based hosts with two or more active vehicles, with at least seven trip days per month, with a vehicle value between $25,000 and $34,999, from January 2018 to March 2020. Earnings have not been reduced to reflect costs such as vehicle maintenance, cleaning, insurance, and deductibles.
Depending on how you purchased those vehicles, you may need to subtract your costs from those totals. If you have car payments, deduct that. And of course insurance, you will need to get higher liability insurance to cover other drivers. Turo of course takes a percentage for their part to help bring you business and use their platform. If you have paid off cars, that is best. Some people use the profits from the business to help pay off the cars faster so that they can have a paid off group of cars and then start buying new ones in cash. Using the average income from above, if you had 9 paid-off vehicles making almost $100k/year, that would be pretty amazing. Even subtracting $20k/year for insurance and maintenance, that is more than most people make in their full-time jobs and you will earn that and basically be financially free. AND you can still scale bigger and do more. Pretty amazing I think.
Flexibility
You could do this as a side hustle. For example, if you are already working as an Uber driver, you can rotate the cars you use for Uber while renting out the others. You may even end up discovering that your Uber passengers have a preference of vehicle to help you grow that income as well. And if you don’t want to be bothered while you take a vacation, simply remove your cars availability during that time. Or hire an assistant to help you.
Risks
There are of course risks as well. Someone could get into an accident with your car. Granted you have insurance to cover that, but you will have a deductible but more importantly, that vehicle will be unavailable to rent while it is being repaired. Someone could steal the vehicle. I think in that scenario, Turo covers it, but I am not 100% certain on that. Renters fill out their personal information so if someone were to steal it, there is something that can be done. Your standard insurance probably would not consider it theft since you gave them the keys.
In all regards, I do think this is a viable business that anyone can do. As you know from my typical blog posts, I like real estate. That is my business. However, I do like the idea of Turo as well and I may give it a try. I like Jeeps so it may be an excuse for me to buy a Jeep. If the income is at least enough to pay for the vehicle, that would make me happy. I need to first do some deeper investigating in my area. I have already looked and I know that people are renting vehicles on Turo in my area so it is proven, I just need to find out how many days they are actually renting. And then set myself apart by providing better vehicles.
If I do end up starting a Turo business, I will make an update to this or write a second post describing my experience. If I were to actually scale it to the point where I need a lot, I would hire my kids to help run it and teach them about entrepreneurship.
My goal here is to inform you of options to help earn more income and build a business. Compared to most other businesses, this one takes the least to get started and can be done by anyone, just about anywhere. I would love to hear back from any of you of your success stories with Turo and how it has worked out for you. Please leave comments so others can see and be inspired as well. Just please be sure to do your own research and thoroughly consider the risks before deciding to give this a try.
More information
Here are a few more links to YouTube videos for you to learn more about Turo and decide if it is something you want to try to do.
https://youtu.be/kFXxUpnJj1c – “How I buy my cars for Turo”
https://youtu.be/8g3ZcsFkhis – “I bought a Turo business?!” – this one describes the differences in earnings between an older car and a newer, nicer car. Usually the more expensive the vehicle, the more it will rent for. Not sure which actually has better profits though. The more expensive will also have higher insurance and maintenance.
https://youtu.be/3gCXUp8b2zk – This guy documents buying his first car to be strictly used for the business
https://youtu.be/W_01eckETe0 – This guy has a specific niche business of classic cars and makes $175k/month. He does also mention that every single car in the fleet has been in an accident.
And finally, to show that not everything is rainbows and roses. Here is a video of a guy who had a bad experience and lost money. It sounds like he bought high-end cars and maybe wasn’t renting them for enough. He talks about renting them for $150/day as being a high price, but looking at the national car rental places, and average small suv is around that range anyway. Jeeps tend to rent for $300/day in some areas. So I’m not certain that he and his associates did it properly. But he makes some other good points as well for the negatives to consider : https://youtu.be/Xz3Je2x46io
