Side Hustle Series: Turo Rental Car Host
Next up in the Side Hustle Series is hosting on Turo. The idea arose in 2021 when we were looking to upgrade my wife's 2016 Chevy Cruze to an SUV. When we requested its trade-in value, we were disappointed to learn that it was only worth about $3,000. The car was in good shape without any mechanical issues and had never been in an accident. Hence, we decided to explore the potential revenue we could make by renting the car out on Turo.
If you're unfamiliar, Turo is a car rental company that allows owners to rent their private vehicles out, almost like Airbnb for cars. It allows you set the price, availability, daily mileage caps, and more. Renters are required to replace the gas they use just like commercial car rentals as well. Turo also includes different insurance packages that dictate coverage amounts, deductibles, and profit retention. For example, if you select their '75 Plan,' you keep 75% of the trip price, you receive $750K in insurance, and have a $250 deductible. If you were to select their '90 Plan,' you would keep 90% of trip prices, receive $750K in insurance, and have a $2,500 deductible. So there are a few tradeoffs between the several plans they offer; we selected the 75 Plan.
Since my wife and I had used Turo to rent a vehicle before, we were somewhat familiar with the platform. Prior to listing her vehicle on there, we conducted some research into what the best price would be in order to generate the most demand, as well as profit. Hence, we listed at the lower end of the spectrum to compete with similar vehicles, and chose Turo's automatic price update option to adjust with the latest market conditions. To our pleasant surprise, our starting point of $30/day was a hit, and we received our first booking within just a few hours. And the rest was history.
We paid the remaining car's balance off within a few months , and went on to make over $7,000 in less than year. The average profit was about $600/month, which is more than the average cash flow from a rental property. During the peak summer months, we consistently generated over $800/month! Granted, we were in the LA market, so our proceeds were probably higher than most other places around the country. Nevertheless, from our experience, we believe Turo can be a very profitable investment in most markets, but especially metro ones near an airport. The average Turo host makes between $500-$1,000 per month.
While renting out the vehicle, the maintenance was fairly easy. The primary upkeep was to wash and clean vehicle in between rentals, especially sanitization because we were in the midst of Covid. We also had to sure ensure the car continued to run well. This was not too difficult because our Chevy was only a few years old. Turo also requires an annual maintenance checklist to be completed by a certified mechanic. We did run into a couple of mechanical issues while renting the vehicle out that caused us to missed additional rentals due to extended repair times, but these were anomalies. The car was mechanically sound the majority of the time.
The worst problem we ran into was when one of the renters got into an accident, but failed to notify us about it. We were only made aware when we went to wash the car, and noticed huge dents on the hood. We immediately contacted the renter and they then informed us of the incident. We agreed to handle the situation using Turo's insurance, and thankfully, they covered it just like their coverage claims. The insurance claim with Turo was quick and seamless. They even sent the payment directly to us via check.
The other snag was when a renter smoked in the vehicle. While this was something we explicitly did not allow, the renter decided to do so anyways. Unfortunately, Turo did not honor our claim for this infraction, because we were unable to prove that someone had smoked in the car. Which is counterintuitive, because proving a foul smell is impossible via email. We would have liked Turo to handle this situation better, but we were able to get the stench out over time. Thus, I advise to emphasize smoking not being allowed if you desire not to have it.
One suggestion to garner more income is to offer additional destinations for pickup and drop-off. Turo allows you to select a home location, along with supplemental pickup and drop-off locations for an additional charge. You are able to add several locations and set the price point for each site. This was a great way for us to achieve increased income. Our priciest location was LAX because of the logistics involved, so we priced it at $120 per round trip. This involved us meeting the renter at the airport when their flights arrived and departed.
For the most part, the car ran great over the time we rented it out. The car reached 140,000 miles before we went in for a repair, only to find out that the engine had a blown head gasket. The cost to repair the gasket was not worthwhile, so we sold the car to our mechanic. Overall though, the experience was great, and we are anticipating the acquisition of more vehicles to continue renting out on Turo. For those looking for a side hustle or an investment with a low barrier to entry, I would highly recommend giving Turo a try. Feel free to let me know if you have any questions!