After being laid off at his job at Microsoft, Ryan Rea was in financial dire straits. A few years later, he moved to Miami and started a new job in the tech industry. Things were looking up. He just needed a car.
Rea wanted a Volvo SUV, but because of his subpar credit, he was forced to get an expensive auto loan, which cost around $800 per month. It was around then he saw the first ad for Turo on Facebook.
Billed as the Airbnb of cars, Turo is a peer-to-peer, car-sharing platform that helps car owners rent out their cars. While Turo has been around since 2010, it’s become even more popular during the pandemic: The company filed to go public in August.
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“I started doing the math,” he said. “If I can rent this car out for $100 a day for just a week, I can make my loan payment.”
He made a Turo account and listed his car in September 2020. In just one day, the car was booked for two weeks. While Rea was happy to get the extra income, he had a new problem: He now didn’t have a car for work. He searched online and found a Volvo convertible in Texas for $15,000 and was able to secure a bank loan that “wasn’t as bad as before.” He flew to pick it up, driving it 1,500 miles back to Miami.
Curious if this car would rent as well, he listed it on the app — within a few days it was booked for the month.
“I was like, ‘I think I’m onto something,’” Rea said.
He was right. Within a year, Rea would amass a fleet of 15 rental cars, earning up to $4,000 a month — all on the side.
Turo takes the wheel
Turo allows you to rent out someone’s private vehicle for a day. While there are a number of car-sharing apps out there, Turo is one of the largest: It offers more than 450,000 vehicles, including 1,300 makes and models worldwide, according to a company spokesperson.
If you tried to rent a car this summer, you probably experienced sticker shock. Rental car prices skyrocketed last year, thanks to supply shortages and increased demand. Daily car rental rates during the Fourth of July have increased 86% compared to last Independence Day, topping out at $166, according to AAA’s Leisure Travel Index.
Many rental companies sold off their fleets at the beginning of the pandemic, only to have few cars to rent once travel picked back up. Turo helped fill the affordability gap — because it doesn’t own the vehicles, the company doesn’t need to purchase and maintain cars.
Not only that, but Turo gave workers a chance to monetize the car sitting in their driveway while they worked from home or make some extra income. For example, in Miami, the fourth largest Turo market and Rea’s home, the average host makes around $1,100 a month. In Los Angeles, Turo’s largest market, hosts make an average $6,700 a month.
Growing the car empire
Rea recognized that Turo could be a good side hustle, but he had spent all of his extra money buying the first two cars. He consulted his brother-in-law, an accountant, to “lay down the numbers.” They decided to purchase a third car together, which booked out solidly again.
“We saw a real opportunity for a business,” Rea said.
He got a small bonus at work and started looking for a fourth car, but by this point, the “car market was very, very hot.” Many shoppers turned online to find cars in new markets for better prices. By May 2021, Rea had found and bought his fourth car online, a 2013 Chevy Volt for $6,000, and his fifth car, a 2012 Chevy Volt for $8,000.
“I thought each new car would be the one I would be driving, but they would book out again!” He said. “Eventually, I had to work out a schedule where I always had a car.”
The next few cars Rea bought came from Twitter. He had been posting about his experience using Turo online for some time but decided to post a car listing he was interested in — a Fiat 500 — to see if anyone was interested in funding the $6,500 purchase for a cut of the profit.
“In 30 minutes, I had three people offer to send me a check,” he said.
This past summer, Rea’s family, who live in South Dakota, decided to join in on the action. He gave his 18-year-old brother Daniel one of the Chevy Volts to rent out. It soon got booked out for double the price it was renting for in Miami, around $120 a day. Rea’s parents bought a Ford F-150 King Ranch, renting out that and their Ford Escape. His brother-in-law also purchased another car for Rea to rent out.
Rea now manages a fleet of 15 cars. He owns six of them and manages the rest for family and investors, and isn’t planning on slowing down anytime soon. He said he’s meeting with investors to consider expanding into the luxury car rental market. He’s on track to manage 30 cars by the end of 2021.
“This all just a happy accident,” he said. “It’s been great for me.”
The business of car rentals
Turo makes money by taking a cut from both the host and the guest — according to a company spokesperson, hosts can earn up to 90% of the amount renters pay.
According to Turo’s website, the top hosts earn $90,000 per year on average, something Rea says is achievable. However, he sees Turo more as a side hustle than a full-time job. He still works in the tech industry and has no plans to quit his job anytime soon. Rea said he rents each car for around $60 to $80 per day, making between $3,000 and $4,000 per month. Rea said he’s earned back about 60% to 70% of what he’s put in. The rest has gone into buying more cars. Only one of his cars still has a loan on it.
But like renting out a home, renting out a car is more complicated than listing it online and waiting for the bookings to roll in. At the end of the day, it’s your car — and there are a number of logistical challenges that come with renting your car to a stranger. The first, and most obvious, is damage potential.
Your regular car insurance policy will not cover the driver renting your vehicle. Turo offers a protection plan to owners, with different “tiers” of coverage based on what percentage of the booking fee the host gets to keep. These percentages range from 60% to 90%.
Under the 60% plan, Turo will cover eligible damage costs with no deductible through its insurance provider, Liberty Mutual. On the 90% plan, you’re responsible for a $2,500 deductible before Turo covers you. Rea’s plan earn him about 75% of the booking fee, which comes with a $250 deductible on eligible damage.
“I’ve only had one fender bender,” he said. “The guest took pictures and Turo wrote me a check for everything minus the deductible. There are definitely horror stories, but 90% of them are because hosts didn’t follow the rules and policies.”
Guests are often responsible for expenses like gas and cleaning as “add-ons” for their trip. Rea also doesn’t have to pay parking expenses for his fleet — his street offers free parking.
If you’re considering building your own rental car empire, Rea recommends doing your research. Pick a car that’s right for your market, not just the car you want.
“Remember, it’s not just your car; it’s a way to make money,” he said.
Want more side hustle tips? Here’s how to turn your side hustle into a full-time job.
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originally appeared on Policygenius.com and was
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