EPISODE 17 ~ MAKE MORE: Car Rental: Create Your Own Small Business By Letting People Rent Your Car Through Turo
Today we’re talking about whether it’s a good idea —and whether it’s a lucrative idea— to rent out your car to strangers. Should you get in on the sharing economy? Thanks to peer-to-peer services like Turo, it seems like everybody’s doing it. And one person who is doing it well —and doing well at it— is Turo user Kyle Clark.
Kyle, first explain what Turo is and how it works.
Turn is basically the AirBnB of cars.
What possessed you to give Turo a try?
My dream car is what started the whole thing. Ever since I was a young boy, a black, sleek BMW has been my dream car. I was able to afford it about 3 years ago. I bought it and that left my old Honda Civic with 100,000 miles just sitting there. I didn’t want to trade it in for a bad price so I went online to see what I could do with a spare car. I stumbled across Turo which was branded as relay rides. The Honda was well maintained and clean but high mileage. I put it on the site on a whim, renting it out in my neighborhood and Denver area. It was booked out almost solid.
I think a lot of people are queasy about the idea of renting out their car to strangers or just even interacting with strangers. Did you have to get over that?
Well, I don’t rent out my own BMW. But I have always been the quasi entrepreneurial type. Before I got into Turo I was one of the first drivers on the Lyft and Uber platforms when they were new. That had been a pretty lucrative way of getting some side income. So I was used to the idea of the sharing economy.
So the Honda that you already owned did so well, that you actually decided to BUY another car to rent out, right?
After that we took a look at everything and realized 80% of our people were coming from Denver’s airport. We looked at companies there and they charged a lot. We knew people came here to go to the mountains. So we decided to buy an SUV. It did really well. The idea was we will have a ski vehicle! Soon after that, we sold the Honda Civic.
And then in 2016, you really ramped things up with Turo, right?
Between early 2016 and late 2016, our fleet became 7. We purchased 5 cars in addition to the SUV we had. And then my girlfriend put her car on the system too. We keep them at the airport. The public lots that locals use. I go out at night, make sure they are set up for the renter, and we use a lock box.
And there’s enough demand to support all of these privately owned rental cars?
We are doing great. Denver is one of the busiest markets. We average 80-90% rental days a month. All of our cars are equipped with snow tires. For the mountains it is something that out of towners love so ours are rented. Our 3 SUVS and one minivan are always booked in the winter. We only see some of our cars once or twice a month when they are needed for maintenance.
How much do you charge to rent the cars? And is that up to you or does Turo have a say?
We adjust prices seasonally. Our minivan is usually $79/day. On the low end, we have a Nissan hatchback and that rents for $33/day.
Why would someone rent from you instead of from a big established company?
•I think you have to be a certain personality to use the service. Up to 60% of my renters are first time Turo users and they often say ‘I decided to take a chance on you because of glowing reviews.’
•We look at the prices on a daily basis. At Denver International Airport, occasionally you can get a sedan for $15-$20 a day. But under $25, you probably can’t. You can rent my car for $30.
•If you want to drive a Toyota Prius you can’t get that at a lot of big companies, but you can from me.
•In December and January, all cars in Denver are sold out. They could be $150-$200 a day. So our $79 is a good deal.
How much work is it to rent out multiple cars through Turo?
For me it’s about 15-20 hours a week, all in the evenings. Not hard, just time consuming. My full time job is I’m in charge of production of videos for a large software company. That is my 9 to 5 job. Something that has surprised me is that there are only 3 or 4 multiple fleet car owners in our region because it is a bit of work.
What’s the hardest part of the work?
I have had half a dozen flat tires or torn tires or bent rims. I replaced one windshield this year. 3 last year. Rock chips are very common. If a customer has a breakdown or problem they can call me and let me know even though they are supposed to call Turo because they have 24-7 roadside assistance. I was out of town halfway around the world and I contracted with a company to manage cars for me and they let me know a renter had a flat. Turo towed the car to a fit it shop, The renter and I split the cost of the tire 50/50.
What about insurance and liability if a customer gets in an accident?
In most cases, any damage caused by a renter, I will get reimbursed. My insurance company exists merely for state minimums. Their policy is never active. The Turo policy is primary when the car is rented. There’s a million dollar liability policy on all trips thanks to Turo. As long as I meet their terms of service and I’m not negligent, I’m pretty well covered. I’m also covered under the Graves Amendment. The owner of a car who lends it to someone else can’t be held responsible for a death.
So that’s the serious stuff. Do funny things happen too?
Being in Colorado we have a pretty consistent challenge with cannibas smoke in our cars. We have no problem with it but often the next renter doesn’t like it. We have an ozone generator to eliminate odors from closed space and we will run it for an hour if we need it and charge the renter if need be.
Now the fun question: how much money are you able to make renting out cars on Turo?
Last year we grossed $57,000. On a monthly basis, we make about $4,500 gross and $3,500 net after insurance and maintenance. This business is delivering a much larger percentage return than any of my other investments like my 401k.
And you have a plan to make even more money, right?
Yes, in approximately 10 months we will own all of our cars outright. We will pay off our next set of cars faster and our third set of cars we will pay cash for. So we will make profit faster and faster as we go. Because it is a side hustle, and I don’t rely on the money, I am putting 90% back into it.
How meaningful is this extra money to you?
For my girlfriend and I…my multiple nest eggs on wheels is how I feel about it. “I approach it as my small business. It’s how I ensure retirement for my family.”
In addition, I was able to take 8 weeks off and took my girlfriend around the world.
You also say to start small. Why?
Don’t grow too big too fast. Start with one car at a time. Bring one car on at a time slowly. The problems like maintenance and unexpected damage can really throw people for a loop.
You advise Turo owners to respond to renter requests quickly.
Turo uses a 5-star rating system. The quicker you respond to people’s requests, that affects your search ranking and that is what keeps you busy. When people have one of my cars, I always get back to them in 15 to 20 minutes. They are my top priority. People with a trip within the week are my second priority.
And finally, you recommend checking the car yourself between renters.
I visit each car before each trip to make sure they are up to my standards. I give the personal touch to renters by telling them where they can find the cars in the airport lot. Not all owners necessarily visit.