How To *Actually* Buy A Profitable Car For Turo

welcome back to the turo 100 series episode that I'm doing where I teach you everything that I've learned in the last nine years of being a host on the platform today's episode is probably going to be one of the two most important videos you could possibly watch in this 100 video series and it's ve very very crucial to minimizing any downside risk that you could potentially have when becoming a host on platform and acquiring vehicles for your Fleet so in today's episode we're going to recap the last video which was how do you do your market research find the car that actually performs that's within your budget and then how do you actually go out and acquire it at the right deal this is so crucial because if you overpay for cars and they depreciate excessively while you have them on the platform you're going to end up in a really bad position to where you have way too much negative equity on your vehicle and you cannot get out of it and over time if it becomes less profit profitable on the platform well then you end up with a lot of financial liability so starting a business is already risk enough and we want to make sure that we educate ourselves in how this business works so that you don't take on any additional Financial liability if you don't have to right so that's what it's all about so we're going to dive deep into that and then the second most crucial video that's going to come out a little bit later is going to be all about how to actually protect yourself while you're on the platform when it comes to any sort of damage or accidents so again you don't have any Financial liability I really think that if you can minimize your financial liability while being a tah host then it's a great business to be in especially if you can find a great car to fit your market so we're going to run through all of that in this video you might want to grab a pen and a piece of paper to take notes because it's going to dive deep and it's going to give you everything you need to know there is no gatekeeping here at all completely free information and and just everything that I've learned note guys just make sure you hit that subscribe Button as I am putting out this 100 episode series you'll get notified every single time there is a new episode so that you can learn all things too okay so I'm going to make the assumption that you took everything that you learned in the last video and you figured out exactly like what you can see here on my screen what your affordability is so if you're taking 10 to 15% of your income what can you afford when it comes to a car payment which is then going to determine how much of a car you can actually afford in terms of total costs so here I've just done a quick you know math on what most people can sort of comfortably afford and kind of you know averages for car payments right so here we're just going to assume you know if you can comfortably afford a $500 per month payment at a 60 term 60-month term loan you are going to be able to purchase a vehicle of up to about $26,000 now one thing to really remember is right now times are weird and autol loan interest rates are still very very very high now although they've start to correct in some places and for certain categories of cars they are still relatively high from what we are used to see you know those one two and 3% APR loans are kind of non-existent so you have to get a little bit creative to help bring down your cost of doing business so a great way to do that is by going through you know financial institutions like Credit Unions for example where they offer far more competitive auto loan rates okay so if you looked at your income you took 10 to 15% of it you're like okay I can comfortably afford about $500 per month then you're going to go next as we discussed in the last video and do your market research so I went ahead and actually researched my own Market because I'm always really curious to know you know what's going on and so we applied exactly what we learned in the last video which is you know we're searching a couple months out in advance so we can really see all of the inventory that's out there and then we can get a good idea for the cars that are performing and as I went through this list I extensively I took notes on cars that looked interesting to me the day rates that they're getting the number of days that they're rented per month roughly and what that could potentially look like in terms of monthly income and if based on what I'm calculating that is turning out to be more than $500 per month which is the cost of your car payment and we do want it to be two to three times more because you always want to have room for insurance and maintenance cost you know all the variable expenses of being in business then we really take those options and we consider them as very strong contenders for potential cars that we can list on in our Fleet so one of the cars while I was doing my own market research here that really stood out to me was this Chrysler Pacifica 2021 now immediately I saw it had 85 trips it was going for 8 $3 per day which these days if you thoroughly look at the market $83 per day is a much higher day rate than we are used to seeing right and right now is not really even peak season of turo just yet because that's typically summertime so you know that means I feel like okay it's $83 per day right now and as we go into summer it should traditionally speaking based on Market pattern Trends come up in the summertime meaning there is even more potential for me to make money so what I did was I opened up that listing just to confirm if what I thought was true and I went ahead and I just looked at okay how is April performing you know I counted the number of days as you can see here I'm going to zoom in the number of days that are dashed out and I'm going to sort of just estimate right that okay more less it looks like you know this car is being rented out for about 7 8 9 10 days so far in April and maybe it'll pick up about another 5 days um and then in May you know it already has advanced booking so that's always a really great sign and then there's also some bookings in June so these are fantastic signs when you see those Advanced bookings coming in that potentially this car is going to perform well now I'm going to expect that you guys do you know deep math but just for the sake of this video I'm going to do a little back of the napkin type of math for you guys just to show you how I very quickly figure out if a car is a contender or not so originally you know I saw that okay this car had a lot of trips it has great reviews and ratings and it's going for $83 per day and for the month of April you know it has 10 days rented out which isn't fantastic given that today is already the 23rd of the month but given that there is still a little over a week to go in the month you know it could potentially pick up more days but it has advanced bookings as well which is always a promising side so with that said I'm going to just do some really quick math okay at $83 per day it's already been rented out for 10 days out of the month that is $830 so $830 is your gross right out of that turos is going to take their cut we will discuss this in depth later but most hosts tend to be on the 75% plan Revenue share plan with turo meaning you are giving turo 25% of your Revenue so if I want to figure out okay after paying turo their CAU how much money am I taking home well 75% of $830 is is $622 so given that the car has only been rented out for 10 days out of the month which again isn't fantastic it is still above that 500 number which makes me feel like okay you we have a solid Contender here that potentially has a lot more to gain and more potential to be rented out in the market so now what we do next is we are going to go see how is this car priced in the market as a buyer you know can I afford this can I find this in my payment can I find it for below my payment and make even more room for margin okay so this is where things get juicy and this is where your margins come from this is so important I cannot emphasize this enough because so many people like miss out on this completely they just see oh a car is performing well let me just go out and buy this car list on the platform and it's going to yield me the same result when in fact that that is not actually how it works you have to make sure that your cost of ownership and your cost of doing business with that specific vehicle is as low as it can possibly be so that you expand your room for profit and margin right but if you go into a car and you overpay for it well then you're immediately going to eat away at any potential possibility for potential profit and then you're going to end up just paying all that money into the cost of the car so this is where I feel like people get really emotional and they make hasty decisions because they get excited it's like oh yeah let me just go out buy this car I have momentum and I want to start this business and I'm excited which is amazing you should have that momentum but you always want to make sure that you do your due diligence and you make sure that you are acquiring the right car at the right price because look no matter what car you end up purchasing right you are going to be putting in almost the same amount of Labor so if you're going to be getting a car make sure you get it like as efficiently as possible so you can maximize your revenue for all the labor you're going to put into it you know so we want to work smart not hard that is always the endgame and we want the outcome to be income so with that said one of my favorite websites to use as you guys can see here is cargurus.com there is a lot of stuff I love about CarGurus so what I've done here is I just Googled cargurus.com Chrysler Pacifica PR index okay so you're just going to do that quick Google search and it's going to show up with this link and again you can fill in the blank for any card that you're looking for or you could also just go to cargurus.com and you're going to go to their price trend and then you can select whatever car you are interested in and start doing your research okay so the very first thing that I always advise everybody to look at because you might ask yourself well how do I know if I'm even overpaying for this car how do I know if it's overpriced right particularly if you are not familiar with the car market which obviously most people are not most people are not spending their day researching the market and trying to figure out okay like you know how are prices Changing Times are crazy the last couple years have been crazy prices have gone up they've gone down there's been supply shortages and now there's more Supply and not enough demand so tons have has been happening but the clearest way to actually get an idea of what is actually happening in the car market specifically to the car that you are looking to purchase is by using car gurus and as you can see here one of the things that I've done is I selected the start date to get the price trend graph in 2019 and then I have it to present day now the reason why I do it to 2019 is just because I like to just sort of gauge you know how were things prior to 2020 and how are they today in comparison to that now it doesn't mean that prior to 2020 is the normal that we are pegging ourselves to and that that's what we're waiting to come back to because we it is highly plausible that we have a new normal when it comes to prices in the market for really anything right groceries cars Insurance anything so I like to just get an idea now if you follow here with me this light blue line as indicated by this Legend here is going to be the pricing for the Chrysler Pacifica between 2019 and 2024 and you can just see you know when the supply shortages happened and prices went up you know especially in 2022 there was a 30% increase in prices for this vehicle since prior to 2020 which is insane for a cost of a vehicle to go up by 30% it is absolutely just wild blows my mind now if you can look at present day it is actually very close to if not almost exactly the same as 2019 so since 2019 the Chrysler Pacifica prices are only. 27% above what they were in 2019 and that is magical because you won't typically see that for a lot of cars because the last couple years things have been Haywire so whenever I see something like this to where it's either close to 2019 or below 2019 I mean those are green flags all the way makes me super happy and I'm like yes yes yes these are all the signs that I'm looking for which means I'm interested in a vehicle that in the market is not overpriced so I don't even have to worry about that so as soon as a car is overpriced it makes it nearly impossible to purchase it at a good enough deal to where it makes sense to list it on the turo platform so all great information so far that we're seeing now if you go down one of the things that I love to look at right here you guys see this is like the geeky math side of me that comes out and like love numbers obviously so um if you look at 2021 2022 models 2023 models you are seeing right here this is the year over-year change in price so for 22 for 2022 model your Chrysler pacificas the price has come down by $29 .7% right so remember that 30% increase that we saw it almost corrected itself now what's even more beautiful than that is that in 2023 for the 2023 models it came down by 10.23% and so far in 2024 we're not really seeing um oh actually we are so if you look right here in the last 30 days the prices have come down by over 5% okay so typically red number number number go down not a good sign but in this scenario it's exactly what we want to see we want to see as many red negative percentages as we can because again that is just lighting the way to yes this is a good decision and it's going to potentially be a great buy now of course now that we have verified all of this information that hey okay this is a car that's not overpriced and I can probably get a good deal on it and the prices have been coming down that means you know there's there's going to be room to negotiate there's going to be room to really like get this at a good deal then you want to go online and you want to start shopping so how do I actually find this car make sure it's in my budget and make sure that I'm getting a great deal on it okay so one of the things that you want to do is you want to look at CarGurus is already going to give you a bunch of car listing options now there are tons of online retailers obviously you can go to an Edmonds a CarMax um you know an auto trader the list is endless right car G is just one of them and pretty much they all aggregate kind of like the same listings but one of the reasons why I love car gers is because they're telling you relative to the market whether or not a car is priced at a good deal or a great deal or a bad deal or a fair deal right so we're just going to go ahead and select this uh see all option here and we are going to see well what cars are listed in my area and which ones could potentially be a good buy now here one of the things that you will notice is that I am looking at used Chrysler pacificas now you can certainly go and look at new bottles I did see a bunch of new models during my research and you could potentially get them at a decent deal but the key is to stay very close to the car payment that we can afford but also if we are going to go the used route we don't want to purchase a vehicle that is high in mileage so that we don't end up with tons of variable cost when it comes maintenance right personally for me I hate maintenance issues it's one of the things about the business that is my least favorite but there are tons of other people who are more car Savvy um you know and they know how to do you know small mechanical jobs like you know I'm sure a lot of you guys out there and ladies you know you can change your own oil you can you know maybe change out your brake pads and do all kinds of stuff right so maybe if you are more mechanically inclined or you love cars or whatever it might be higher mileage may not necessarily be an issue for you but for me I don't like it and also I really believe that if you are trying to run your business in a way that is predictable in terms of Revenue if you can downside if you can take any downside risk right like variable maintenance expense and you can mitigate that then it's going to make it much much easier for you to figure out okay this is how profitable this C could be over the long run so in this case based on what I've seen in the turo market and the types of cars that are renting unfortunately there isn't as much of a market that can sustain brand new cars these days it doesn't mean it's going to be like that in the future and it certainly wasn't like that in the past but that is what is currently happening in the market because in order to really be able to turn a margin you really have to lower your cost of ownership on these vehicles which typically means that you need to buy slightly used right slightly used low mileage if you can that way you don't have to have too many variable expenses okay so with that said now I am going through all the listings you know I picked sort of an area that I would be comfortable purchasing in um and you know you're kind of just looking at Price versus year versus miles you know what's looking good to you you know I would say these days on turo you know I wouldn't really want to list anything older than 2018 that's just a personal preference of mine I think that you know if you're going much older than that then you may um you know receive some resistance from renters who may not want to rent older cars that's just my own kind of personal way of doing this business and then also you have to think like if you're going to have this car for two three or four years you know it's going to age the vehicle which will make you less sought after in the pl on the platform that's just my opinion not always the case but I think it can be the case and you always want to make maintain your competitive Advantage so you see right here I mean you can go 2020 kind of about 35,000 Mi which is going for $26,000 or you can go a couple years older than that you know a 2018 with 34,600 mil going for almost $6,000 less right and you can see like they do a quick estimation of what your monthly payment would be so this is going to just very very very quickly tell you hey you know what I can afford this car it's going to be within budget it's going to be within you know kind of what I was planning um or it's not right so like right here it's like 31,500 estimated you know um payment is going to be $612 and car gurus is tell me that it's just a fair deal we're probably going to stay away from that so anything where it's like it's a good deal you know or even if it's a fair deal then you know that when you go to actually purchase this vehicle you're going to have to negotiate that c deal to make it a great deal right and there's always room for negotiation in all things so this is kind of why I like to use car gurus because it does tell you you know whether or not based on market trends and averages if something is a good deal so again you know you're seeing a few options here you're going to kind of just look through this right and you're going to vet out the dealerships and maybe they have incentives going on you know which color combination looks good to you that you think would perform so so um one of the ones that I was looking at that I thought could okay potentially be a decent deal it's a 2020 so I feel like on the platform it shows up as being kind of newer you know cuz it's still in the 20s versus like an 18 or 17 or 16e um and also it says estimated car payment 5'11 and it's a good deal now immediately when I look at this I'm like okay it's a white color nice and neutral for turo the year is pretty good the miles are pretty low it's it's pretty close to my payment which means I'm fairly certain that I can negotiate this deal to potentially get to a better deal and also with that said if you feel like you're not super comfortable with negotiating car deals one of the things that I put together not too long ago is something I call a car buying guide completely free but essentially um I created this car buying guide to maximize your turot profits and it's just kind of a stepbystep guide on how to negotiate that car deal right particularly if you're not comfortable with doing it or if you haven't done it much you know in the 4050 cars that I've purchased throughout the years I really kind of learned my way it's just a quick little PDF guide um you can grab it at my website Power host. Club completely free but basically it'll save you from having to take notes and it's just going to give you a little guide on how to do it right so once you find a car like this and you figure out okay this is where I need to be then you can use some of those negotiation tips to really figure out okay you know this is how I'm going to go in and capture that c deal and then finally um my favorite website like we started off with for the affordability calculator nerd wallet also does an autol loan calculator which I love right because you always want to like know what you're walking into and what the math has to look like before you get to a dealership you don't want the dealer or the salesperson to guide you on hey this is what the numbers have to be no you want to walk in and you want to say hey this this is what the math has to be this is my budget I cannot go beyond this now it is up to you guys to figure out how you can help me and get me to this number so that is always how I I do it I always tell them like you know what I wish this was an emotional decision I wish it was like oh based on you know the car has this feature and that feature and it's this color and it has these rims but you know unfortunately like I just have a very strict budget that I have to stick to and I don't have room in it but if you guys are able to help me get to that number like I'm more than happy to do business with you guys and I have found that every time I use that line it always works out in my favor because I think people do truly want to help you and help you figure out okay how can we make this happen right so you want to make sure that you do that now the reason why I'm showing you guys this autol loan calculator here is because you know when we looked at the rough payment of this vehicle it was $511 right you can see that right there now our budget was 500 so usually I like to try to aim for lower than my budget so that I can have more margins and I can leave more room for any variable expense and I can leave room for insurance and maintenance cost and all that good stuff right so for me going into this deal that is priced at roughly about $26,000 I want to see you know can I get them to Discount this car by about $3,000 to help help bring down my monthly cost and give me more room in my budget so then I just put in here okay if I want to buy this car for $233,000 what does the deal have to look like well at $23,000 my monthly payment is going to be $434 right which is solid puts me in a great position it's going to make me more profitable and it's going to give me a little wiggle room should I need to spend on other things right so that's how you kind of go into and you're looking at okay you know you're going to do your research on maybe what your credit union or your local bank is offering as an interest rate on autol loans in case you want to refinance through them or Finance through them and then you know most loans are at a 60-month period um and so yeah that's essentially all you're going to do and this is literally going to give you every major element of doing this deal and doing it in such a way that it's going to make you profitable on the platform which is the whole point of it right so that's how you really want to go about it now I'm going to put all of these links down in the description below that way you guys can play with the affordability calculator you can play with the car loan calculator and then I will also put a link to the Carr's price trend graph and that is going to guide you through doing your research knowing what you can afford you know you never want to walk into one of these deals at least in my experience like blindly right and not knowing like ooh okay you know it's very easy to go to a dealership and they're like okay you know what the best we can do we know you wanted 434 but you know can you come up just a little bit and do like 520 and you know maybe in your mind you're like okay you know that's not bad that's only $90 per per month more I mean what's $90 I can do $90 right but then the reality is if you say yeah I can do $90 well that's like another day or two of rentals you know and so you're chipping away at the number of rentable days in a month for your vehicle so you never want to give into that because that's how you know things begin to sort of slip and they eat away at your profit margin which in the long run is going to put you in a tighter position and that's what you really want to be avoid you always want to be comfortable when you're going into um purchasing a vehicle specifically for the purpose of having it on turo super important so um make sure you guys take notes on that and I'll catch you guys in the next episode [Music]

Channel: Saimah's Experience

Views: 1,499

Keywords: turo, turo car rentals, how turo works, saimahsexperience, saimahs experience, saimah turo, turo 100

Id: y_CYD6bf898

Length: 26min 40sec (1600 seconds)

Published: Mon May 06 2024