Should you rent your car out on Turo?

One of the biggest questions that I get asked by people when I tell them that I rent my car on Turo is if they should do it to. So today, I want to give you some tools to answer the question, “should you rent your car out on turo?” I recently had a brief email exchange with a reader that addressed a question that I have received in different formats a few times, so I thought it would make sense to share it with the whole stealthy and wealthy community. Jessie P asked the following question:

Scott,

I came across your blog and your experience renting on Turo, I was thinking about it but one of my biggest fears was over saturation of markets (i.e. everyone can theoretically drive for uber and lyft). I am concerned that I am getting into the trend that has already reached “critical mass” and there won’t be any money left to be made. Is this of big concern or do i just need to transition from a scarcity mindset to an abundance mindset?

Thank you for your response in advance,

Jessie

P.S. i am recently a college graduate who understands jobs are not secure in this day and age and someone who wants to achieve financial freedom so that i never have to worry about money again

Should you rent your car out on Turo?

In addition to loving Jessie’s mentality and approach to financial freedom, I was also intrigued because this is a question that I hear frequently. Should you rent on Turo when the market is getting more competitive each day? There are a few ways to look at this question, but it mostly comes down to the competition in your market and your personal goals with renting on Turo and if the site can fulfill those goals. In my response to Jessie, I talked through a lot of the key factors in deciding if you should rent on Turo and thought that it would be worth sharing that reply with the rest of you fine folks. Here is my full reply:

Hi Jessie,

Thanks for the email. I think that you have a very valid question and the “saturated market” angle can be a legitimate concern. I am currently considering purchasing a second car purely for renting out on Turo and I’m going through the same type of analysis.

    • There are a couple of questions that I would ask you (or you would ask yourself) to determine the potential:
  • What type of car would you be renting out?
  • What market are you in?
  • Do you own the car outright, have a payment, or lease it?

You’ll want to look at the competition for that specific car in your market and see how many similar cars are currently for rent on Turo. Make sure you consider similar models, not just the exact same. For instance, there may be few Ford Mustangs, but a lot of Chevy Camaros, so you’ll want to look at the 3-4 models that are closest to yours. You can’t see earnings for others who are renting a car that is similar to yours, but you can see how many times it has been rented and what their current rental rate is. Keep in mind that many people use dynamic pricing, so it may be higher now than it typically would rent for. For instance, my car is currently listed at $79.00 per day, but I have rented it for as low as $34 per day when it is a less busy season.

Once you get a sense of the supply and demand in the market for your type of vehicle (assuming that you already have a vehicle and are not purchasing one specifically for renting out), you will want to determine how much you would need to make to consider it worthwhile for you to rent your vehicle out on Turo.

  • If you lease or have a payment on your car, what is your monthly payment?
  • If you lease your vehicle, what is your mileage allowance and how much do you have to pay per mile if you go over that allowance?

You want to make sure that you are making a high enough “per mile” rate to make it profitable even if you exceed your mileage.

  •  If you own your car, you will want to do a similar analysis of how the value will decline for each mile that you rent it out. You can do this by looking at Kelley Blue Book.

You will want to look at the current value of your car. Let’s say you have a 2012 Ford Focus with 25,000 miles on it. KBB values this car at $7,794.00 if you sell to a private third party. If that same car has 30,000 miles on it, it is valued at $7,646.00. So if you are renting that vehicle, your cost per mile is essentially $0.0296. If you rent your car with a daily limit of 200 miles, the “mileage cost” to you would be around $6.

Costs of renting on Turo

Next, you will want to factor in your other operating costs that you will incur. Your Turo expense calculation should include:

  • Cleaning – Assume at least a $5.00 car wash per rental. If you assume an average rental period of 3 days, you would be looking at about $1.67 per day in “cleaning fees.”
  • Insurance – You do not have to pay for any additional insurance beyond what is provided to the renter through Turo, but you will want your own personal insurance on the vehicle that you own. My insurance is $100.00 per month, so we can assume an “insurance cost” of about $3.33 per day (this can vary greatly depending on the driver and the car).
  • Alternative transportation method – let’s say this is your primary vehicle and you will need to get yourself to work, school, etc. If you don’t have a bike or friends who are willing to drive you around, you can assume about $4.00 per day in bus or light rail passes (this is close to what I’ve experienced in my city, but I’m really not sure). If you choose to take Uber rides, your cost may be slightly higher.
  • Your time – This is often overlooked, but if you assume that getting your car cleaned, dropping it off and communication on Turo will take about 1.5 hours per transaction and you value your time at $12.00 per hour, then you are looking at a cost of $18 for a three day period, which comes out to $6.00 per day.
  • Turo Fees – with the vehicle protection package that I’ve chosen in the past, Turo takes 25% of profits.

There are a lot of different ways to play with this formula, but hopefully this gives you a framework for making decisions. So in our example that we have here, your equation would look like the following:

Ford Focus Rental: Turo Profit Calculation

Ford Focus - Turo Rental Example
Example of renting your car on Turo

In our Ford Focus example that we used above, the profit calculation for renting that vehicle would look something like this (all numbers are for demonstration purposes only):

  • Rental Price: $40.00 per day (one example from Phoenix, Arizona)
  • Turo Fees: $10.00 per day
  • Mileage Fees (assuming ownership): $6.00 per day
  • Cleaning Fees: $1.66 per day
  • Insurance Fees: $3.33 per day
  • Alternative Transportation Fees: $4.00 per day
  • Your Time: $6.00 per day
  • Total Profit: $9.01 per day

Let’s say that you rented your car out for 2 days per week for the rest of the year, with one month being unavailable for different reasons (vacation, unavailable to provide keys, etc.). That would be 88 total days for a grand total of $792.88 in profit. Again, there are a ton of variables in this scenario, so think about what is most realistic in your situation and determine if it makes sense to you. One other thing to keep in mind is that your profits will be taxed, so that is another factor to consider, although a certain percentage of your car expenses can be deductible.

Hopefully this helps to answer the question of how to evaluate if you should rent your car on Turo. If you have other questions, thoughts or success stories, don’t hesitate to add them in the comments section below.

5 thoughts on “Should you rent your car out on Turo?”

  1. Great analysis. One think I would point out about your final calculation is that there are two types of expenses – fixed and variable. And while variable expenses would in the scenario be only present at the same time the vehicle is rented, the fixed expenses are present regardless of the frequency of renting. Therefore, you should subtract another $91 worth of insurance on an annual basis from your profit. Also, what about other fixed expenses such gasoline, maintenance, emission testing costs, license plate renewals etc. Those cost should be also subtracted from your annual profit. I am curious to hear your thoughts. I have developed a similar analysis, but because I would be purchasing a vehicle to solely rent on Turo, I am also adding the cost of the loan and down-payment.

    Reply
    • Jakub,

      Thanks for the comment. You bring up a really good point. The reason for the lack of fixed expenses being included in the calculation was that in my mind, I was operating under the assumption that this was not a car purchased primarily for Turo. If this was a vehicle that was being used by the owner most of the time, then I would assume that they would have costs like emissions testing, license plate renewals, etc. anyway. If this is the case, it would make sense to apply the percentage of a year that the car was rented for that particular rental to the overall cost of things like emissions. For example, if the car is rented for a one week rental, you could take the license and emissions costs and apply 1/52 of those to the cost of that particular rental. If you were purchasing a car to rent on Turo, then yes, all of those expenses would be applied to the car rental. The one exception in your example would be gasoline, as any gas used by a renter would be replaced by that renter before they return the car. Thank you for the thoughtful comment!

      Reply
  2. Good stuff. There’s a lot to consider when weighing the risks and rewards for Turo, Getaroud, Outdoorsy, etc… Besides, I’ve had a sneaking suspicion that many of the claims to high earnings have been overinflated. With that in mind, I decided that the only way to convince my CFO (Chief Family Officer) that peer-to-peer car sharing would be worth a try was to run the numbers myself. To that end I put together a cash flow calculator at carsharehustle.com. I also summarized much of the research I did on the risk vs reward continuum especially as it relates to Insurance.

    Reply
  3. I’ve used Turo on quite a few occasions and, aside from the odd hiccup when the owner showed up to pick up his car an hour late (I called Turo and had them alert the guy when he stopped responding to in-app messages), my experience has been largely positive. The Porsche in the title pic looks familiar…I believe I tried to rent it during a recent trip to L.A., but the price kept jumping around between $79 and $109/day and the owner never replied, so I split my time between a GTI and a Clubman S (both manual) instead. Not as much fun, but still pretty cool.

    My rentals so far (disproportionately leaning towards VW, it would seem):

    – A previous-gen (‘12) Golf R in Cleveland in a lake-effect blizzard, for a trip to East Lansing, MI and back. Lovely car, but more boring than any of the three Focus STs I’ve owned/leased so far.

    – A ‘12 Jetta TDI in Dallas. Decent pickup, worst fucking seats ever. G’head, ask me about them.

    – ‘13 Cooper S in L.A. – this was the non-responsive owner who claimed he spent the night prior to drop-off at the bedside of his terminally ill father; I privately called B.S. as he looked like someone who just came off a three-day bender. Or maybe I’m just an awful person who assumes the worst in people. Could be.

    – ‘15 GTI in L.A.; surprisingly similar observation to the Golf R: perfectly pleasant, boring as fuck (as fucks get, anyways).

    – ‘17 Clubman S in L.A. with less than 2K miles on the odo. Lovely little car, absolutely my favorite on Turo so far. Really cool owner, as well (hence the link, hope it’s OK).

    I love Turo because it lets me rent manual cars Stateside and my corporate lease insurance covers me on the rentals.

    I had seen a $44/day Focus RS in Florida before, but the guy seems to have come to his senses since and bumped it to $109/day. Ah well.

    Reply

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