Playbook #116: Turo Car Rentals

🖼️ The Big Picture

If you want to buy assets that can earn recurring side-income, but Airbnb and rental houses seem like too much money or too big of a project, then starting a Turo car rental business could be a great fit. 

It’s easier to dip your toe into than real estate, requires far less investment and risk, and can immediately improve your lifestyle, allowing you to own and drive your dream car… for free!

One of our Wealth Factory team members recently did exactly that, so we interviewed him about his unique and thorough process for evaluating the opportunity, choosing the right vehicle, and optimizing the listing. This system helped him to get his first rental contract within 24 hours of listing, and be profitable in his first month. 

Because this is such an accessible and exciting opportunity that we thought many CAPITALIZE members might want to take advantage of, this playbook will be a little longer than usual as we share the key golden nuggets from one of our Wealth Factory team members...

Interview with Nordy, our Wealth Factory Developer-Turned-Turo-Host

How did you get started?

I was driving in Austin one day, and all of the sudden everyone in front of me slammed on the brakes. To avoid hitting the person in front of me, I was forced to steer into the guardrail. Thankfully, I was ok… but our car wasn’t. When we got the insurance money, my wife and I discussed our options. 

We could either buy an “ok” car for all cash. Or we could turn a bad experience into a great opportunity and use the money to make a high down payment on a nicer car and use it to start a Turo business. Then we would also have the side benefit of driving a really nice car (that we wouldn’t have otherwise bought) when it’s not rented. And that’s what we decided to do.

How did you decide which car to get?

On Turo, cheap cars do well and luxury cars do well. The ones in the middle… not so much. We knew that we wanted to get something on the higher-end (but not an exotic car like a Ferrari), and from searching through the listings it quickly became apparent that the type of car you offer matters a lot. 

Turo has a “Carculator” that’s a good place to start (it gives an estimate of how much you could earn with different vehicles). But they didn’t have data on my city, and their data is a bit old… so I had to do some research myself. 

In crushing the numbers, I wanted to target something that could rent for around $100 on average. Turo shows all their listings on the map in your area, and you can see which cars are getting rented based on the number of trips and reviews. 

Most people wouldn’t do this (and don’t necessarily need to) - but with my skill set and InvestorDNA I was able to export a good amount of publicly listed data for certain time ranges and sort it into some charts - here’s what I found:

• Cars and work vans do the best. But the demand for vans is very low and there aren't many of them, so we chose a car. 
• Teslas do amazing in Austin - everyone loves to rent an electric car, and they build them here. But there’s a TON of competition on Turo, so I worried I might not be able to rent it out enough. 
• BMW stood out to me next - they’re relatively affordable and do very well on Turo. Some of the models are reliable, and the X4 model stood out to me as a car that does well, with not too much competition, and was within my comfort zone as far as affordability and reliability (I don’t want the hassle of always having it in the shop for repairs).

So after deciding we wanted a used BMW X4, I found a dealership that offered free car washes for life - which is perfect for Turo - and negotiated a price and financing terms that worked.

Are you worried about people damaging your car or getting into an accident?

If you rent your car out for long enough and/or build a fleet of cars, something is going to happen at some point - so you just have to be prepared to deal with that when it comes. The good news is, Turo offers multiple options for insurance coverage - and you can choose how much you want to earn vs. how much you want to be protected. 

It’s been 2 months and I’ve had 5 trips completed so far, and I haven’t had any issues at all yet. And I hope I don’t - I think the odds are more in your favor with higher end cars because of the type of clientele you get. But I’m prepared in case something does. 

You got your first booking within 24 hours and were profitable your first month, that’s pretty cool. How did you do it?

It’s similar to listing your house - the best realtors hire a professional photographer to get great pictures, and then write a compelling description. A lot of people just use their iPhone and have average pictures, so it’s actually pretty easy to stand out. 

A friend of mine is a professional real estate photographer so I brought them in for a favor, and we got really nice photos with a cool cityscape in the background. And then I used ChatGPT to help me write a great description that makes it sound like a car fit for Kings and Queens 👑.

Lastly, I know there’s no credibility when you’re starting out and you have zero trips or reviews, so I put the price a bit lower than other similar cars to attract renters. Then once I have a good track record I can raise my prices.

What’s your vision for this business? Do you want to be a Turo fleet owner?

Right now, we’re using all profits to pay off the car loan much faster than normal, and once it’s fully paid off then every dollar will be profit aside from insurance and maintenance. 

We’ll keep it for 3 - 5 years because we’re in the “luxury” market and renters want nice, new cars. At that point, we’ll probably sell it and roll those proceeds into another vehicle. It’s possible we’ll get a 2nd car before then, but we’ll see how things go as we’re also considering a move to the west coast - so there are some “life” variables that factor in too. 

Some Turo hosts also partner with Airbnb hosts so when a client books a short term rental the host can charge a bit more to include a car as well, so we’re interested in exploring that too. 

Thus far, this has been a great side gig and we really enjoy driving the car, so it’ll probably be something we do on the side for a long time.

🔢 By The Numbers

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CAPITALIZE is a tool for discovering new ways to grow your wealth. You get a new investment idea each week in a simple 7-Minute report. Quickly check to see if it matches your "Investor DNA" and fast-track your way to being a top 1% investor... with less risk. Created by Wealth Factory for people who want to build their wealth and keep it.