Earn More on Turo and GetAround
Hello guys, it’s been a while. Since my last post, I have expanded my fleet from 6 cars to 21 cars. Given that, I want to share a few of the tips and tricks I’ve learned on my car sharing journey on how I have been able to reduce costs and earn more money sharing my cars.
Car Share Vehicle Acquisition
If you’re not familiar with the car industry, buying a car can be one of the most daunting tasks a prospective host faces. What a lot of people don’t understand is that you will make a significant chunk of the vehicles lifetime earnings at acquisition. Given the importance of this task, this means you need to use all of your car buying knowledge and resources to make sure you get a good deal at the dealership. If you don’t know how to buy a car, be sure to check out my previous article as I go over the basics on how to make sure you’re not the sucker every salesperson salivates over.
A few misconceptions that I want to address are: invoice price is NOT the bottom line pricing for dealerships. There will still be money before the dealership reaches the bottom line. Do not fall for the invoice close if your salesperson comes back from the office with an esoteric structure sheet.
I buy all of my cars at various dealer auctions like Adesa and Manheim. I understand that the vast majority of new hosts will not be able to get a license however I highly recommend searching for a local dealer or service that will buy a car at auction for you for a nominal fee. If you’re in California or Las Vegas, I offer this service so feel free to shoot me an email. Turo has also partnered with Stratim (part of AFC) to offer auction access as well as a line of credit for top hosts to expand their fleet. It’s a little pricey but allows hosts that would otherwise be unable to expand have an opportunity to do so.
Getting a good deal when you buy a car is very important because you will spend less time upside down on your loan and won’t have a gap should your car get totaled. Note: DMA is notorious for lowballing on replacement value. Make sure you print out a Monroney label (the sticker that is on the windows at new car dealers) if your vehicle has many options. You want to make sure you’re compensated fairly by the insurance company. Also, don’t forget to doublecheck your tax rate to make sure that part of the payout is correct as well.
When buying a car from Craigslist be sure to check the VIN for the carfax and AutoCheck reports. This will prevent you from purchasing a vehicle that is not eligible (branded titles, rolled back odometer, etc). I offer these checks along with a valuation estimate at a rate of $5/car.
Consider Turo’s Basic Insurance Coverage
If you haven’t heard the bad news yet, Turo has recently announced that it will be lowering the standard protection plan to a 70%/30% split. Since the vast majority of hosts prefer the $0 deductible plan, this can make a significant impact on your bottom line. I did a year-end analysis for my fleet in 2018 and I would have come out ahead over $10,000 accounting for all damage claims.
This makes the 85% basic coverage a more reasonable choice for hosts. The $3,000 deductible seems scary but bear in mind that guests will be responsible for the damage no matter what! If you communicate with your guests clearly you will be surprised how often they will pay out of pocket or file a claim with their own insurer. It’s your job as a host to make sure they understand that you are on their team. An accident is just that – an accident. If your guest believes that you are working in their best interest to resolve a claim you will have better luck coming out ahead as Turo would only payout 20% of the damage up to $3000 while collecting the FULL AMOUNT for your guest.
If you’re a host that mainly rents out cheaper vehicles this may not be a good option for you. Choosing the 85% option is effectively assuming some of the risks Turo takes. If you think your clientele cannot afford $500-$1000 settlement then you should stick with the 70% plan. A side note: in the past year I’ve had over 1,000 trips and the most substantial damage incident was around $1200. If you do the math yourself you can see how much a simple change in insurance packages can drastically increase the profitability of your Turo fleet.
$100,000 revenue on 70% plan would be $121,428 if you chose the 85% plan. That $21,428 spread can potentially cover more than seven totaled vehicles!
Maintaining your Turo and GetAround fleets
Before I expanded my fleet I had never had to do any sort of maintenance on my vehicles and simply took them to the dealership whenever the maintenance light came on.
Now that I have a significant fleet I have found a need to find ways to save money when it comes to maintenance. You don’t have to know how to do the maintenance yourself but by sourcing the parts on your own you will save significant amounts of money when it comes time to take your car to the shop.
I use Meineke for routine maintenance and Discount Tire to mount and balance tires. Always doublecheck with the dealership when it comes to oil changes though. I’ve found that dealerships are price leaders when it comes to oil changes but they use that as a way to upsell other services to customers.
Tires, oil changes, brakes, engine failure, cleaning, and more. These will be the lifeline of your business. If you pay retail price for each of these you will struggle to make any money renting your cars out on Turo. While you may see a positive cash flow at the beginning, you need to make sure you don’t fall victim to the depreciation trap that many hosts disregard.
I’ve found that Tire Rack generally has the highest quality tires at a decent price but be sure to check out tires on Amazon like this one to compare prices. Amazon works well if you aren’t buying bulk and have a Prime membership as they will ship.
In order to save money, find a tire that’s not OEM but has excellent reviews. While they won’t last as long as the best tires you can buy you have to understand that your renters will be beating your car.
No matter what tire you get the tires will lose its tread fast and from my experience on Turo, it’s tough to recoup costs from excess wear on tires unless they do burnouts and leave the residue in the wheel well.
RockAuto is my go-to parts website. Simply select your vehicle year, make, and model and it’ll show you the exact parts you need for your car. If you’re planning on getting oil changes at Meineke just make sure you get the OEM oil filters from RockAuto or the dealer to help increase the life of your engine. Cheap filters can cause the engine to wear faster and an oil filter is generally under $10.
I will also buy the same oil that the dealership uses for my higher-end cars but will use the bulk oil Meineke supplies for the cheaper ones.
Brakes are an example of how much you can save by buying the parts yourself. Recently I had to change the brakes and rotors on my Escalade and it wound up the SAME price as only changing the front brakes and rotors of my Yaris. I also got OEM parts for the Escalade!
That about wraps things up for me. I hope you enjoyed this article and as always feel free to post a question or comment in the section below. I’ll make sure I get to it as soon as possible.
Another trick that I use to cut my cleaning expense down is subscribing to a monthly unlimited car wash plan. I pay $15/month for each vehicle but this allows me to provide a clean car each time while also being able to charge the guest should they not return the car washed. In the past, people would be argumentative about being charged but now that they have the option to go to the wash for free I have not received a single negative review charging for a car wash. Your customers will end up paying for the subscription multiple times over!
If you live in an area that doesn’t rain often then also make sure you have some eco-wash available. A gallon of concentrated solution only runs $50 and will leave a semi-clean sparkling clean. I use Chemical Guy’s eco-wash.
If you have any tips of your own I will be happy to add it in. I’m excited to see how the car sharing economy develops over the next few years and hope you will be there to join me while we stake our place in this opportunity.