Purchase Vehicle to Uber

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Purchase Vehicle to Uber

Kevin Phu
Rental Property Investor · San Diego, CA · Member since 2016 · 507 posts · 171 votes

So an idea crossed my mind and I've done a little thinking about it. Wanted to see what the community's opinion is on it and if they feel it could be a good idea.

General Info on my situation:

Primary vehicle: No payments but can't use as Uber (it's heavily modified)

Debt: ~9k in CC (0% apr/21 months due to balance transfer)

RE Goal: Build capital ASAP to put myself in good position to purchase

Overall Budget: I make good money and after bills/expense I still have a lot left over

I was thinking about purchasing a economical vehicle to double as my daily driver and Uber on the weekends for extra income to put towards RE goal. I was thinking about a used Honda Accord for $10-13k. I would finance it with 0% down at a low rate (around 3.9%) and use the weekend Uber Money to cover payments and insurance. Adding this 2nd vehicle to my policy would increase my insurance premium about $20/month. 

$13k loan at 3.9% over 60 months = $238.83/month

Insurance = ~$20/month

Overall cost per month (excluding gas) = ~$250

I would be driving in my local area (Ventura county) but could also drive 45 minutes away into Los Angeles. I also travel down to San Diego frequently for work so I could also Uber drive there as well.

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Arlen Chou
Investor · Los Altos, CA · Member since 2014 · 942 posts · 1k+ votes
9y

@Kevin Phu I totally believe in the power of the side hustle.  There will be a ton of people who will say "your time is worth more" networking, looking for deals, etc etc.  But those activities are fairly limited...  Driving an Uber for extra cash is what the side hustle is all about; you can do it whenever you have extra time.  You also are forced to drive neighborhoods and learn the lay of the land.

About buying a 2nd car... I personally would sell the "boy toy" and suck it up and roll with the 4 door as my only ride.  Dumping money into a pimped street ride is a waste of money, unless you are going with something that is collectable.  I know, because I now cry about all of the money I have blown on various cars.  Just keep in mind that once you have a ton of cash you will be able to buy better toys.

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  • Kevin Phu
    OP
    Rental Property Investor · San Diego, CA · Member since 2016 · 507 posts · 171 votes
    9y
    Originally posted by @Christopher Morin:

    @Kevin Phu

    Instead of buying, have you considered short term renting or leasing the asset you are looking to purchase?  Do you want to commit to purchasing this business asset?

    Many self-starters like to be minimize their investment risk or commitment due to changing priorities or lifestyle.  By renting or leasing, you can leverage the exact same product, every time, rented on an as-needed basis.  It allows you to divest of unpredictability and most expenses by letting someone else own and maintain the asset.   Having a dedicated vehicle or dealing with unexpected MX can create a liability that traps you in your business.

    Higher end assets are nice because you can branch out.  UberBlack, or a self-branded shuttle or chaufeur service allows a different model than the "Uber-taxi" UberBlack services solicit a higher price point and lower-hassle clientele.  10 hours of work using UberBlack can solicit $600-800. You can either pay your own MX, insurance, turnover fees, or let a company provide you an asset at a fixed rate.  

    I own a company that purchases high end cars such as the Tesla S's, then rents at a consistent and predictable pricing to self-starting business owners desiring supplemental income through Uber, chauffeur services, and shuttle services.

    You could consider using a service that provides you this the same.  PM me if you want details or you'd like us to do some more research on your desired operating area would support an UberBlack rental model.

     I'm willing to commit to purchasing this asset for personal use that I will also use as an Uber side hustle when able. 

    That sounds like a good business model. I don't intend on getting into the rental car business though. Who knows, maybe that will change in the future. As of now though, I have a stable/well paying job and only intend on doing Uber as a side hustle to further my REI capital building.

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  • Jim Farmer
    Venice, FL · Member since 2017 · 3 posts · 0 votes
    9y

    Uber only allows you to drive in one city at a time. Check out the best opportunity for your needs and location within Uber guidelines. I agree with freedom to make extra money in your spare time. 

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  • Kevin Phu
    OP
    Rental Property Investor · San Diego, CA · Member since 2016 · 507 posts · 171 votes
    9y
    Originally posted by @Jim Farmer:

    Uber only allows you to drive in one city at a time. Check out the best opportunity for your needs and location within Uber guidelines. I agree with freedom to make extra money in your spare time. 

     This was something another BP member made me aware of as well. I haven't looked into this much yet but I did see that the city you register in may allow you to drive in surrounding cities as well. I'll have to look into the details.

    I don't see driving in my local city being very profitable so it would either be Los Angeles or Santa Barbara.

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  • Scott TrenchPro Member
    Rental Property Investor · Denver, CO · Member since 2014 · 2k+ posts · 6k+ votes
    9y

    I Ubered for about 6 months in order to add to my savings and put myself in comfortable position to purchase a first rental property. I think it's great hustle. However, expect to make around minimum wage when it's all said and done. Do not make a large financial investment ($2,000 or more) to buy yourself a minimum wage job. It may take you several months of lousy work just to recoup that initial investment. 

    If you can do that for free, or otherwise are purchasing a car as you indicate, then yes, Uber is a reasonable way to collect extra cash. Have an exit point. I stopped Ubering after I bought my first house hack and began working on ways to increase my income in more scalable ways. 

    I think you are very intelligently approaching your finances one step at a time. Get back to zero, build up a large reserve, look for more and better income opportunities at or synergistic with the new job, and look at real estate from a strong personal financial position. 

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  • Steve Moody
    Portland, OR · Member since 2008 · 123 posts · 73 votes
    9y

    Don't forget to add in the additional cost of maintenance into your figures. Oil changes will be more frequent as mileage will rack up, and regularly scheduled maintenance windows will come up sooner (15, 30, 60k mile services). Tires will need to be replaced sooner, and the vehicle value will diminish faster. It might be hard to calculate these values based on the fact that you'll also be driving it outside of the Uber rides, but don't ignore them or your profit might turn out to be much lower than you anticipate. 

    To be honest, pizza delivery guys often make more than Uber drivers depending on the location, and you can do that in any car you want. 

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  • Rob Massopust
    Real Estate Broker · Santa Ana CA [South Coast Metro] · Member since 2016 · 459 posts · 202 votes
    6y

    So what did you end up doing?

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