How Renting Cars Out on Turo Changed My Income Stream
For the past 10 months, I have been listing my personal cars on Turo. I have learned a lot in the last 10 months and still have a lot to learn about the seasonality of Turo and how that affects prices and utilization. I have written a few articles about Turo:
Not everyone should list their cars on Turo. If you have a nicer, more expensive car and you treasure it like your first born, Turo is not for you. If you have an older car and just hoping someone would total it for the insurance money, Turo is perfect for you. The above two posts covers the decision point for listing on Turo and also how to list your car to get more trips.
The income from Turo can vary a lot by how much your car is worth and how much you list the car for. Luxury cars has the highest revenue on Turo but it also has high maintenance and high depreciation costs. Older cars have less revenue but also less depreciation costs so net profit and return on investment can be much higher. I’m in the later category with cars on the lower end. I have reliable cars that I can rent out for weeks or months at a time without worrying about them.
If you are considering listing on Turo, you can use my referral link to sign up and you can get a signup bonus when you list your first car!
How Much Do I Make Per Car?
My cars are worth around $6000 retail (2012-2013 Elantras), with my 2010 BMW 328xi worth around $7000. They can pull in around $600-$800 a month of net revenue from Turo after their 25% commission, depending on how often it gets rented and how I price my cars. During our busy months in the summer, they could do about $800-$1000 a month in Boston. In Los Angeles, I would expect something closer to $400-$600 even in the summer, so rates can vary widely depending on where you live. I live a mile from the city center, so my prices can be a bit higher due to proximity and convenience from the airport, downtown, and the main bus and train station.
For the last two months, I broke $4000 in net revenue a month from Turo with just 4 cars. They have a combined approximate value of $21k so this is probably not something everyone can do from day 1. It took me about 7 months to build up to this but something anyone could do given the right market conditions and car selection. Note that this is not strictly a typical car value to revenue ratio. If you bought a newer model BMW for around $20k, you wouldn’t be able to get close to $4000 in revenue a month. The revenue would be closer to $1500, $2000 if you had multiple reimbursements or other fees charged to drivers.
I expect to just touch $4000 over the next two months and possibly drop to around $3500 in the middle of the winter. I now have two more cars so that should help revenue wise. I added two more cars with values around $4000 (2008 Corolla and 2010 Matrix).
I don’t have any financing fees since I own all my cars outright. I don’t deal with leases or car payments. I can also set my prices higher if I wanted to and increase my revenue per vehicle mile but that will lower my revenue a month. It is a delicate balance of revenue per mile (efficiency) and revenue per month (cash flow). I haven’t done a detailed analysis of these two factors to establish the optimal listing price, but any analysis done would only hold true for a few weeks. The market is still growing so much and new cars and hosts are entering in the market all the time so the optimal listing price can move drastically from week to week.
What is Realistic for the Typical Turo Host?
I would say that a realistic expectation for a Turo host would be income supplementation and not have it be a dominant part of your income. While it is very possible to have 100% of your income through Turo, it takes a lot of time, knowledge, and hard work to build to that level. It all starts with either having or buying the right car for Turo. Next is proper management of your cars and your potential Turo clients.
If I had to put a number on it, I would say $400-$1000 a month is very possible for most people, depending on how often you rent out your car. If you do not have much time to manage your cars, Getaround may be a better option since that service offers remote unlocking/locking. Beware that your earnings per mile may be much lower on Getaround and you have no control over who rents your car.
Income from Turo can often pay for your lease or car payment, which is good for those people who don’t drive their car much but still need a car for various reasons. Be realistic about your expectations from Turo and you can definitely make it work. Don’t start Turo expecting to make $10k a month since its a lot to learn and do before you get anywhere near that number.
How Long Does It Take to Build This Income?
This took me about 10 months to build, starting with just one car and now to 6. I would recommend everyone to just start with one or two cars and go slowly. Try different settings and prices to see what works best to for you. Try not to take out an loans to start this type of business so you have less financial risk and less dependency on the level of income. Some months may be very good and some months may be bad and not having loans or leases makes it easier for you to run your Turo business.
How about Taxes from Turo Income?
I bought most of my cars this year, so I should be able to write off their entire value this year. The two other cars I had last year were on mileage and once I convert over to expenses, I should be able to depreciate those two cars fully this year. This year, I bought about $18000 worth of cars and I have yet to earn that much on Turo. So far, all of that revenue is “tax free.” Once you include the depreciation from my other two cars, I should be able to write off close to $30k in revenue from taxes, which gives me a small boost in net income this year, but almost very little help next year with no depreciation.
I also had a long list of parts I had to buy to fix up these cars, so I can deduct those too. Going forward, these expenses shouldn’t be very high since I’m going through most of the major parts replacements (suspension, brakes) and should be good for another year or two.
What is the Time Commitment?
It is not a lot of time commitment, but once you have more than a few cars, you essentially need to be around all the time. I have cars returned and going out to new renters almost every day of the week, so I can’t really take a vacation or go on a weekend trip unless I block off some dates. If I change some settings around, I may be able to sneak out for a quick weekend trip, but I also risk multiple cars sitting at home for the weekend, which will affect my revenue. You can change your settings to require longer bookings so you only need to see your car once a week or less. In the off-peak seasons, I need to lower my restrictions so I get more bookings and I don’t want to lower my prices that much to try to get month long bookings. I typically have three day minimums and many of my trips now are at least 4 days or longer.
For just the check-in and check-out process, it only takes 30 minutes including cleaning the car and taking pictures from many angles. I typically take about 45 pictures of each car for each rental, and it becomes tedious when you need to do that for trips that are less than 3 days long. The car may require more service, like oil changes or tire repair, so that can take up an hour or two. Brakes and suspension can take a few hours to do yourself so I usually give myself two days to do it, in case something goes wrong. Some cars may require a deeper cleaning that may take an hour or two. Once you have a few cars, an entire week could be taken up with just maintenance and repairs.
Driving on Uber and Lyft works well with my “Turo Schedule.” Most of my Turo trips start and end at my home location, so I just need to be home for a renter to come pickup the car or drop off the car. I can usually work a few hours then come home to meet the renters and then either stay home or go back out to drive. I typically only drive on weekends and sometimes Mondays and Fridays. I usually home an hour before the scheduled start or end of the trip. Guests typically are pretty close to on-time for pickup. I have guests return the car a few hours early to being an hour late, so drop-off times can vary a lot. This is another reason why it requires me to be around most of the time since pickup/dropoff times can very a lot.
Much of this can be automated with remote pickup/dropoff or paying someone to help you check-in and check-out cars, but I’m too much of a control freak to let someone else handle it at the moment. I am considering letting someone handle my cars for a few months so I don’t have to worry about the snow and parking. There are a few hosts who do all remote handoffs and this is the only way to scale up without having to be there all the time or hiring any staff.
What Are The Risks?
The biggest risk with Turo is your car not being rented out. When your car sits, you don’t earn any money and if you have car payments to make, you will need other funds to cover the shortfall of cashflow. The second biggest risk is if your car gets stolen or impounded because it was used in a criminal act. Turo hosts don’t get paid until the car is recovered so it is in your best interest to track your cars and/or put in ignition kill switches in your car. In some states, you cannot report a car stolen until it is gone for more than 30 days, which is a crazy policy. When your car is impounded, the car could be in impound indefinitely (no end date nor any way to retrieve it during an investigation) and reimbursement from Turo can take months to settle. As an added security measure, I always check the license on the reservation and take pictures of the license in case something like this happens.
Another risks are that your car can be damaged and totaled. In these cases, Turo will charge the renter the cost of repair if its damaged or the actual cash value for your car in case it is totaled. If you are upside down on your car (owe more than its worth), this is the worst situation for you since you will have to pay money out of pocket to cancel out the loan. There is gap insurance for situations like this and a must in any situation. Turo does not reimburse for maintenance type issues, such as engine issues or suspension/axle issues. The burden of proof is extremely high and I have never seen Turo charge a customer for something like that, even though you could prove the renter damaged it. If an item is actually broken, the renter is charged for it. Tires and wheel damage are also charged to the renter.
The last risks are if the renter leaves your car dirty, smoke in your car, or drive a lot of miles on your car. There are various fees you can collect from the renter in these situations but sometimes the trouble is so much more than the fees you collect. There is also a cap of $1000 on reimbursements for mileage so there is a risk that the renter racks up thousands of extra miles on your car during the rental period.
A lot of crazy stuff can happen with rental cars so be prepared to deal with them, especially if your car is on the lower end and is rented at a low price point ($20-$30 a day).
How Renting Cars Out on Turo Changed My Income Stream
While I still drive on Lyft and Uber regularly for income, I don’t have to drive nearly as much to generate a base level of income in addition to the income from my website. I consider it something that is relatively consistent so I find myself driving a bit less. I also spend time managing my small fleet of cars to ensure that they are always ready and available for rental. Turo has fit in nicely with my independent contractor jobs and providing a steady stream of income.
I always try to keep one of my cars at home so I can drive on Lyft and Uber. I typically price my cars in a small range, so I can maximize my income. Some people will book the lower priced car first and then my highest priced car last. I usually reserve the highest priced car for myself and drive that over the next few days. I also list all my cars on Lyft and Uber so I can change to another car quickly.
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