How to Use Turo to Rent Out Your Car
Most people believe that cars are a necessary evil. Yes, they help you do your work and run your errands, but they also drain a LOT of money out of your pocket.
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Between loan payments, insurance policies, gas, repairs, and maintenance, they are almost as expensive as having a kid!
Not for me, though. And after you read this article, you too might decide to turn your car into a car rental business.
I’ve done presentations, been on a few podcasts, and written some articles about how I have turned my car from a money pit into a money tree. Following these appearances, I received a wide array of questions from a lot of people.
In this article, I’m going to explain exactly what I did, how I did it, and what it means to rent your car out to someone else.
I will also share with you why I recently stopped listing for car renters, and the exact financial results now that my initial journey into car sharing is over.
If you’re looking for a creative way to turn your car from a traditional liability into a cash flow-producing asset, this article is for you.
I understand that this exact tactic may not work in your current situation. But I do hope it will at least get your proverbial wheels spinning about how to turn your personal car into a side hustle that earns you extra money, too!
Purchasing My Car
When I first moved to Denver in April 2017, one of the first things I did was purchase a car. My intention was to use the car to be a Lyft or Uber driver, so I was looking for something that was reliable and had good gas mileage.
I purchased a 2013 Toyota Prius C with 52,000 miles from the dealer. It was listed at $12,500, but I was able to negotiate it down to $10,000 (paid with cash) using the tactics from the book Never Split the Difference.
The Ride-Sharing Experience
For the first three months of living in Denver, I would drive around for Lyft. The purpose was to make money while getting to know a new city and meeting a whole bunch of random people. I accomplished all of these goals. I made over $3,000, figured out where I wanted to buy my first property, and even found my current Airbnb cleaning crew. Win! Win! Win!
After those three months though, I realized that I didn’t have an “asset” so much as a job—and a fairly low-paying one at that. So I stopped driving for Lyft and started focusing on other, higher-paying activities, such as giving 110 percent to my 9-to-5 job at BiggerPockets.
The ride-sharing app had served its purpose for me, and I was happy to move on with an extra $3,000, a better understanding of my home city, and picking up a great cleaning crew.
The Turo Experience: An Introduction to Car-Sharing
I intentionally purchased my first property 1.5 miles from the office so that my primary method of transportation would be my bicycle or my feet. Every single day, I would bike past my car in the drive. I thought, “It’s a shame this car is just sitting there. How can I put it to work for me? Can I rent my car out to someone since I’m not using it?”
Then I remembered I had once rented someone’s car on a site called Turo. For those of you who don’t know, Turo is the “Airbnb for cars.” People who have an extra car, or do not use their cars regularly, put them up on a marketplace for renters, either occasionally or for bigger chunks of time.
And that’s exactly what I did with my Prius. Now, rather than just sitting there underutilized, it would provide me with a passive income.
Listing Your Car on Turo: How it Works
Turo is a great app for people seeking to rent out one or more of their cars. Based out of San Francisco, Turo boasted 4 million users as of 2017, with 170,000 cars available for rent. In many ways, Turo is a win-win for hosts and renters, offering an innovative way to share vehicles. However, before you go list your car, become familiar with the site’s criteria for hosting.
- The car must be legally registered in any state but New York. Sorry, New Yorkers! (Go Sox!)
- The car must be no more than 12 years old.
- The car must meet Turo’s insurance policy requirements.
- The car must have less than 130,000 miles on it and have a clean title.
If your car meets all the requirements for renting to someone else, you are now able to list it on Turo’s platform for renters to pick up. Competitor platform Getaround has a similar process and workflow but is only available in select U.S. cities.
Listing Your Car on the Turo App
Creating your listing is intuitive. All you need to do is go to Turo.com and click “list your car” in the top navigation bar. Turo will then take you through the steps necessary to list your car. You’ll need your driver’s license, license plate number, and insurance information when signing up to be a host, so be sure to have all that handy.
You don’t need to be an expert to optimize your Turo listing. Here’s what I did for my listing: I gave as much detail as possible for renters to absorb.
- How good is it on gas?
- Does it have 4-wheel drive?
- Is it a smooth ride?
- Do you have a sunroof?
- What about a Bluetooth radio?
- Air conditioning?
- Power windows?
Everything you can think of, put it down! Don’t worry, Turo helps you, too.
Then, it’s time for the pictures. In some cities, Turo actually offers to pay for a photographer to come take photos of your car. The only downside is that they take a while to get there. Personally, I just used photos from my iPhone 7 and had success.
When you take the photos, make sure your car is newly cleaned and take them on a sunny day. You’ve seen the car commercials—just imitate them and you’ll be fine.
Here are a few pictures of my car.
How Renters Find Your Car Listing
Now that the car is listed and ready to go, the last step is to set pricing. This part is very intuitive on the Turo app. All I do is look at similar cars in my area and charge a couple dollars lower. Prices vary based on seasonality, so be sure to check back once a month to make sure your rates remain competitive.
Turo offers several dynamic pricing models to help hosts maximize their car sharing utilization by slightly raising prices during popular times (like weekends, holidays), and lowering prices during regular weekdays.
Here’s how it works: When someone seeking a car rental logs onto Turo, they’ll ask the app for a car near where they are or want to pick up the vehicle. When they book your car, you’ll get notified through the Turo app. Woohoo!
Some car owners will then send a welcome message telling them how excited you are for their trip. Honestly, I never did this—but regardless, you should be prepared to respond promptly to any inquiries from renters. Quick response times and good response rates likely make your listing more attractive.
Once a week, I would send the renters for the upcoming week a generic message welcoming them to Denver and giving them instructions on how to find, unlock, and operate the car. If they had any further questions from there, I would answer them kindly.
That’s pretty much it. It was an easy business to operate. It took less than an hour per week of time and most of it was just texting the renters.
After explaining the above, I usually get a slew of questions:
- How do you know they are good drivers?
- How do you coordinate the key handoff?
- What if something happens?
- What if your car gets destroyed?
I will try to be proactive and answer these questions right now.
How do I ensure safety and protection when renting my car out?
In order to book a car through Turo, you need to go through a screening process. Turo needs to verify that you are 21, that you have a valid driver’s license and clean driving record, and that you meet their auto insurance score benchmark.
The auto insurance score benchmark is, in my opinion, the most important. It’s the equivalent of a credit score for insurance agencies. Essentially, it is a three-digit score that predicts the probability that your would-be renter will file an insurance claim.
The driver’s ability to utilize the rental service will be highly dependent on this score. If it’s bad, Turo will not allow the user on the site. The process is nearly identical for Getaround renters to be able to rent from the app. This is how Turo and Getaround sustain the reliability of their marketplaces, and frankly, it’s a key way they stand apart from traditional rental companies.
How do you hand off the keys?
This one is simple. The best way is to purchase a magnetic lockbox and put it underneath your car.
Tell your driver the location and combination of your lockbox in the message you send, and you will be good to go. Ask them to return the key and lockbox after they are done with the rental.
Since you will not be there for the key handoff, make sure that they take before and after pictures! This is extremely important. Turo may not reimburse you for damage if there are no pictures submitted to them within 24 hours.
What if something happens to my car while it’s rented?
If something happens to your car while the renter is driving it or before they drop off the car when they’re done, the renter will report the problem to Turo, the police, and you as the owner. Turo also offers roadside assistance for renters in most cities. If there’s an accident or incident, the police will have your car towed, and you will then need to decide whether you want to take it to a mechanic (if it can be saved) or the scrap yard (if it’s totaled). So the million dollar question is—who pays for this?
There are up to three insurance policy options that can provide coverage:
- Turo-provided liability insurance for both you and the renter
- Turo offers three different protection levels. The highest level of protection means more coverage for you, but less of the gross fee paid by the renters goes into your pocket.
- The renter’s personal insurance
- Your personal liability insurance—check with your insurance company to verify the personal coverage details.
There is a high probability that one of the above options will pay out and you will be covered. However, if none of these options work, you will be left with the bill. Read more about the personal insurance coverage details for hosts and for renters on Turo.
Let me tell you what happened to me.
My Car-Sharing Story
After just over a year of renting my car through Turo, a renter totaled my car. In hindsight, it was the best thing that could have happened! Here are some pictures.
First and foremost, everyone walked away uninjured—just a couple of scrapes and bruises. Phew!
Secondly, I was going to take my car off Turo in a few weeks anyway, because as with Lyft, I thought it had served its purpose for over a year. I was ready to sacrifice a little bit of cash flow to have a car at my disposal.
Thirdly, I was cash flowing approximately $250 per month on average for the past 12 months. That is $250 after I paid for insurance and set $100 per month aside for repairs. Remember, I paid cash at the outset so no car payments.
Lastly, after going through the insurance process, I was able to get over $11,000 back from my car. If you remember correctly, I purchased the car over a year ago for just $10,000. So after one year and about 20,000 miles, I was able to get $11,000 for my $10,000 car on top of the monthly cash flow.
Quick recap: I purchased the car for $10,000. For the first three months, I drove for Lyft and made $3,000 extra cash in total. For the next 12 months, I listed it as a rental car on Turo and generated $250 per month cash flow, or $3,000 for the year.
Then, my car got totaled and I was able to obtain $11,000 in insurance money for the car. That’s a $1,000 gain on the vehicle alone.
All in all, after about 15 months of having the car, my net worth increased by $7,000, meaning $6,000 from cash flow and $1,000 from the sale. Not a bad deal—especially when compared to the average American, whose car likely costs them around $8,500 per year to own and maintain!
The car ownership to car rental path might not work for everyone, but it’s a more-than-viable path for many of you. The gig economy has opened up fascinating opportunities for car sharing, as one of the most stagnant assets in the country is being freed up to generate cash flow for millions of car owners.
Turo Alternatives: Getaround & HyreCar
As mentioned, Turo isn’t the only car-sharing app out there. If you’re looking to explore other options for listing your car for rental, Getaround and HyreCar are alternatives to consider.
Similar to Turo, Getaround is based out of San Francisco, and its top markets for service include Boston, Chicago, Los Angeles, Miami, New Jersey, Philadelphia, Portland, San Francisco, Seattle, and Washington, D.C. In each of these cities, Getaround features readily available vehicles at airports, shopping centers, convention centers, and more—along with passengers looking for cars. To view the full list of locales where Getaround is available (including Canada, Germany, and the United Kingdom!), click here.
HyreCar is a little different than Turo and Getaround in that it’s designed specifically for Uber, Lyft, and on-demand delivery drivers. HyreCar is a great option for those using ride-sharing as a side hustle, who don’t want to use their personal vehicle or who don’t own a vehicle and want to generate extra income through these services. Based in Los Angeles, HyreCar recently expanded into all 50 states and Washington, D.C., so finding or hosting a car through the app should be straightforward in all major U.S. cities.
I hope this article proved to be useful to you and cleared up some of the uncertainties about renting your car out. The traditional car rental companies have a serious new competitor in Turo, one that could revolutionize the industry.
I realize that I am fortunate to have had this outcome. I’m not guaranteeing that you will have the same results, but I do believe that the odds of you improving your financial position by renting your car out and creating extra income is much better than if you don’t.
As for what’s next for me? I am looking for a traditional car to buy that I can pay $6,000-$7,000 for so I can pocket $4,000-$5,000 of liability insurance. It’s always a good plan to avoid car payments when possible, so I’ll be paying in cash.
Would you consider turning your car into a rental car on Turo, Getaround, or Hyrecar? Why or why not?