As I mentioned in the Welcome Back post, I’ll be posting a few older articles that are still relevant. This is one of those. I originally wrote this in July 2023 at our one year mark. There’s some good insights in here on whether it’s worth it to become a Turo host. Enjoy!
Wow, I can’t believe it’s been a full year since our Turo journey began. We got into this just as Turo was relaunched in New York last summer, and we’ve now experienced a complete cycle. From the busy summer season to the lull of winter, here’s a look back at our experience. We’ll also give you our opinion on whether Turo is a worthwhile venture to get into in 2023 and beyond. The good, bad, and ugly of Turo – Here we go!
The Good
Turo is an easy business to start. To think that we went from nothing to a small car rental business in 10 days is really pretty insane. Hats off to Turo for making this possible! I recommend doing a lot of research before jumping in, but the actual process for getting started is pretty straightforward:
1. Get an LLC or other business entity to operate through
2. Get an EIN for your LLC
3. Open a business checking account
4. Get pre-approved for financing
5. Purchase your car
6. Take photos of the car
7. Write up your listing
8. Get bookings
9. Run your business
10. Optimize your operation
This is the path we followed to get started, but I wouldn’t necessarily go this same route if we had to do it over again. More on this later.
Turo comes with some great tax deductions, on par with investment real estate. You can deduct all your business expenses (including interest on your car loans), and you get to claim depreciation on all the cars in your fleet. Just be sure to track all your expenses throughout the year and hire a professional to do your taxes if you’re not an expert.
The Bad
Our Turo journey hasn’t been all sunshine and roses. There have been plenty of headaches, including recalls, slow seasons, damage and repairs, and delivery nightmares. I’ve written extensively about each of these issues, so feel free to go back and read those in detail. Here are the highlights:
1. Recalls – All three of our Rogues were hit with the same recall issue at the same time. We lost half our fleet for about six weeks. I’m just glad it happened during the slow season or else we would have lost a ton of money.
2. Slow season – Speaking of which, we all know the car rental business has peaks and valleys, and the winter in NY is definitely a deep, dark valley. From November to March things were pretty bad, and it was compounded by the bad decision to add a Tesla to the fleet in November.
3. Damage and repairs – We haven’t had a lot of damage to our cars, but when it happens it can be really frustrating. We’ve been fortunate because Turo has paid us in full and on time for all of our claims. But that’s only half the story. You still have to account for the lost time (and money) having the cars sitting in a repair shop.
4. Delivery nightmares – Ah, Turo’s delivery options for hosts. My favorite topic. Please just read the rant I posted last month (sorry, this post no longer exists).
The Ugly
Your Turo business can go from bad to ugly in a hurry if you’re not careful. Avoid some of the pitfalls we fell into:
1. Overpaying for cars – Mistake number one was that we went to a dealership to buy all our cars. And this was in 2022 near the height of the inflated used car market. We ended up paying way more than the cars were worth and since we financed them, we’re underwater on all of them.
Find a good deal on a car and pay cash if you can. This will lead to a much less stressful time when the slow season hits and your car isn’t renting. At least you won’t have a car note to pay. Or, use creative financing with better terms (think interest-only minimum payments).
2. Buying too many cars, too soon – You can really get yourself into trouble trying to grow your fleet too quickly. I kinda feel like we did this. I think we should have stuck to four or five max. And like I said earlier, buying the Tesla has turned out to be a mistake.
3. Not buying/researching which cars perform well in your area – If you buy a car that no one near you will rent, then you’re in for some trouble. We did a ton of research, and most of the cars we chose are really popular. The only one struggling is the Tesla, and even my Power Host Support rep can’t figure out why.
Would I start a Turo business if I could do it over again?
Armed with the knowledge and experience I have now, would I start a Turo business if I had to do it all over again? The answer is Yes, but I’d do a few things better:
1. I would buy the cars differently by leveraging my stock portfolio and real estate equity to purchase the cars.
2. I would obsessively pay off all the cars as soon as possible.
3. I would grow my fleet at a slower pace and more organically, letting the income from the cars buy more cars.
4. I would cap my fleet at 4 or 5 cars until I was able to hire a team to help manage the operation.
Final Thoughts
Overall, this Turo journey has been a great experience! Sure, we’ve made some mistakes, but the benefits of becoming business owners have outweighed the negative aspects. It hasn’t been very profitable, but the tax advantages are amazing (which is why I wanted to start a business in the first place)! We may look to sell a car or two before the end of the year, but we’re looking forward to what the next 12 months and beyond of our Turo experiment look like.
