My Turo Exit Strategy! How I buy cars for Turo. When to get out

hi guys hope everyone's doing well so finally I'm getting the chance to make a video about financing cars and how to buy cars when you want to listen Montero this is probably one of the most popular questions that I get all the time and so my intention for this video is to hopefully demystify how people accumulate cars under their accounts and also just how or what I think is some of the best ways to purchase cars so to begin with I have found over the years from talking to people and working with people there are a few common ways that people do this and people that I personally know of as well so I would say you know of course you have your group of people that have access to cash or have savings or whatever it is and they'll purchase cars from auction or they'll purchase cars that are a little bit cheaper and they'll you know get lower end cars that they can buy quite a few of and have those listed so that's one way that they accumulate cars then you have people who have previously had either car rental businesses or they're leveraging some sort of business that they either currently had or previously had to help them purchase these cars whether they're using revenue from that or cash flow from that or credit from that that is how they're also buying some of these cars then the most common way that people get cars is through financing them in other people's names that I would say probably 9 out of 10 times is the way that people accumulate cars on the platform and I also have done the same you know I've seen people with as little as 5 cars - 10 20 30 45 cars and this is the method that they use now how they have their deals set up with people or if they're sharing in revenue and things like that I really don't know I think that's probably really individualized based on you know whatever their connection is with their people are the people that they're using to finance cars that's an entirely separate thing but with that said I will go over today with financing and kind of what I think after years of doing this today what I think the best strategy is and the strategies that I would use moving forward and kind of where I started with this and starting to build my fleet so almost five years ago I had a smart car and then I got a second car smart car which one was a lease and the second one I financed and I had young credit at the time so I did those under my name and it kind of helped me build my credit then I had somebody who was looking to build their credit so at that time they had about a 500 credit score and they had a lot of credit history but just at that moment in time their credit wasn't so hot they had good car loans in the past good credit in the past so they wanted to rebuild their credit and getting a car loan was a good way of doing this but they didn't necessarily wanna have to make that payment so we found a Mini Cooper at a local car max which I thought would do well on the platform it was priced pretty fairly it was I think $15,000 we went into car max and the person got approved for the financing on the Mini Cooper it was some crazy APR like 21% APR it was through Santander which they're known to do these types of loans but it was okay because we had a plan we said that we would finance this car for 12 months so that he could build his credit get his credit back up and then we would trade out of the car in 12 months and into the car that he wanted to be in and that's pretty much exactly how the plan rolled out so my rule of thumb even now and it was back then as well was to try to find a car that would do three times its car payment on the platform and of course I haven't always been able to reach that but that was the goal with Mini Cooper now so we got the Mini Cooper for about $15,000 let me just make sure I don't butcher this the payment was around $360 per month we did put down a $500 deposit if I remember correctly and then on average I was pricing it out at about 45 to 47 dollars per day and then the market had much higher pricing so that you could totally get that all day long especially on a convertible Mini Cooper if that car was out all the time I would say on average us probably profiting about $400 or so at the time so yeah I mean it was okay it was good for the short run and then what we did was we found the car that he wanted to trade the Mini Cooper in for it was a Chevy Silverado it was $9,000 off MSRP so when a wouldn't go trade-in the Mini Cooper the Mini Cooper had about $3,000 a negative equity so we wanted to mitigate that negative equity and what I've learned over time is dealerships will really work on you with this stuff if you opt in for some of their extras such as their you know extended warranties or their additional maintenance plans alarms and GPS systems and so forth if you opt in to buy that stuff and add that on to your financing then they're okay with discounting the MSRP because they make more money off of those products now the nice thing about those products is that usually if you trade in the car early they prorate those products and refund that back to you which I've also done in the past so we were able to do that and work that $3,000 negative negative equity off by adding in the products and so it all kind of worked out really well now of course in this scenario there was no rev-share because they totally don't think that it's worth it when the margins are so low so that's kind of how I got started and as always I can only share with you guys based on the mistakes that I've made or the things that I've experienced so you know I'm gonna kind of break this down into little sections and then I'll share an example of a deal that I'm currently looking for so hopefully it'll all make sense and then at the very end of this video I will share my biggest piece of advice when walking into the dealership and trying to purchase a car that has worked well for me okay so getting into a car it's really simple it all depends on the car payment if you are trying to find a car to listen to you want to make sure that you have the right car payment that makes sense for the car being on the platform and based on what you think it can earn and how many days it could be out for that car payment is very crucial and it must make sense so before you go into a dealership or you try to go buy a car please I beg you do your research do your homework and go and prepared already knowing what that car payment has to be don't let them tell you what the car payment is gonna be know what it has to be so that you can work with them on getting there so the second thing is once you know what your car payment is now you're ready to go buy the car when you go to the dealership and you already know which car it is and what the car payment has to be you really want to express that let your sales guy know that hey this is where my car payment needs to be and they will work their magic on getting you there it's very discretionary there have many ways of doing this and they will help you get there but just don't budge on that car payment because it's very important you don't want to get stuck with the payment that you can't make and then also another very very important thing that I cannot stress enough and I talk about this a lot is that you have to know what your exit strategy is going to be for the car you don't want to be three years into a car and it's having all these maintenance problems and you're out of warranty and it's costing you money and then you want to get out of the car and what do you know you're stuck with a bunch of depreciation and negative equity and you're gonna be screwed so you don't want to do that now when you go to buy that car you really want to be open about your exit strategy with your salesperson so for me it's usually like hey I want to be out of this car in twelve months I'm roughly gonna put probably around fifteen to twenty thousand miles on this car so what do we need to do to get this payment right so that after 12 months or fourteen months my loan-to-value looks good so that I'm not stuck with a bunch of negative equity when I want to get out of this car so you really want to be clear with what your goals are and what your as it is so that they can work with you on this now going back to the part about doing your homework before you go in it's hard to find a depreciation calculator online that works for all cars so what you want to do is do a little research and find a car that is either the car that you're trying to buy or similar that has the amount of miles that you think you're gonna put on it where the numbers match up and see what that depreciation looks like after a year and if the numbers work out go use Kelley Blue Book kbb.com that's helpful too but what I was gonna say is that you don't want to just go into a dealership and just say oh this car looks nice I think it'll rent well antero hey let me go buy this car don't do that please take the time to do the research and honestly doing the research is probably the part of this whole Tarot business that requires the most amount of patience and time because if you are looking for very specific deals and very specific numbers it takes time to find those and it's not just you know it's not like you just walk into the store and it's the first shiny thing hanging on the rack and that's the thing that you want to buy no sometimes you have to dig and dig and dig until you can find the right deals because you don't want to end up with some crazy liability at the end of it right so you just want to be very responsible with the decision that you make when it comes to buying a car okay so now with all of that said we want to know our monthly payment before going in and we want to share and subscribe to you with the sales guys so that we end up on the right side of this when we try to get out of the car because we don't want to keep these cars forever because we don't want to have his shoes come out of pocket so now now that we know this let's go over an example and exactly how I would break it down from looking for the car - how what the numbers need to look like and how I would get out of it and this is actually a deal that I'm currently looking for so I kind of wrote it out okay so we're in January of 2020 the new C eights are coming out and probably be a little bit difficult to get your hands on them the 2019 C 7s or Corvettes the 2019 models are really pushing for smoking deals right now and the reason for that is a lot of these dealerships the more c7s the 2019 s that they can push the better chances they have at having a better allotment for the new c8 so they're highly motivated to move the c7 so it's a great time to find the discounts that you're looking for and to get to the car payments that you're looking for okay so this is what my ideal deal would be for a 2019 c7 I would be looking for something that's 18 percent off of MSRP and of probably looking for a Corvette that is priced out at about fifty nine thousand MSRP not always easy to come by but they are out there okay and then with 18 percent off of MSRP I think that comes out to forty six thousand dollars but I'm not exactly sure so I think it's around forty six thousands with tax and licensing and adding on all the additional stuff I would be looking for something that is about fifty two thousand dollars out the door finance clean and ready to go which lands at a car payment of about eight hundred dollars with no money down okay so this is a really advantageous time to go after a car like a 2019 Corvette which is nice because you're in the newer model now the goal would be to profit at a minimum of about eighty dollars per day and with a new 2019 c7 you can be priced out at I think on average between a hundred to a hundred and twenty dollars per day now let's think about the revenue side of things right so on a slow month you might have to drop down a Corvette all the way down to seventy to eighty dollars per day and now I'm on the basic insurance because that's what makes the most sense for me so that's an 85 percent cut in revenue so my profit on a slow month once again a very slow month would be roughly about sixty eight dollars per day so in about a half month two weeks you would make about 952 which worst case scenario on a very slow month at least you're making your payment and you know you have an abysmal revenue but on a good month or even an average month you know you can have your car priced out at about a hundred and twenty dollars per day and profit at a hundred dollars per day you would cover your payment in eight days and anything above that is a profit of a hundred dollars per day and it's very normal for a Corvette to average on normal or busy months between 20 and 25 days out of the month so that's a good pretty good margin at least in my opinion on that car so I kind of like the numbers on that so 2019 c7 I'll be looking for you so now that you know I know what percentage off of MSRP the car has to be I know what my car payment has to be I know that it's the right time to find that deal for this specific car I know that this specific car performs quite well on the platform because I did my research I did my homework and for me personally I've owned many Corvettes in the past so I know and I have experience with them now I want to think about what is my exit great I can get into the car I can find my payment my loan-to-value and all that's gonna match up when I want to get out of it but how exactly do I get out of it so I think that there are three main rules to a good exit on a car so first and foremost you want to get that roughly about 18% or more off of MSRP buying either a new car or also sometimes the service learners or demo vehicles so definitely newer you want to try to aim to get that lower interest rate so one to three percent would be ideal that would be the money spot where you want to land and then you want to make sure that the car that you're choosing has a great resale value so again going back to doing your homework and looking at cars that are this or similar and kind of what they look like a year later with miles on it what is that depreciation now for example this is a real-life example early 2019 I traded in a bunch of my Corvettes and I had traded them in for BMWs trading in a Corvette at a BMW dealership was a great Lou because BMW is not viewing a Corvette as an auction car necessarily they're looking at a Corvette as a car that they can put on their lot and get more money for and finance it through BMW Financial which ends up being very cashflow positive for them so it's a great resale trade-in car now versus doing a car which I have done in the past and these are actually two of my cars from the past doing a car like a Kia Sorento or a Jeep Wrangler a Sahara they don't have as much value to a dealership like BMW sitting on the lot so those cars usually end up going to auction so they are not able to offer as much on the trade-in and then it just ends up being not as great of a value for you so what I used to do when I got into Tara was I would always look at those lists online like I would Google cars with the highest resale value and it would be all these cars like the Jeep Wrangler you know that was one of the top cars with the resale value with a great resale value and I was like oh my gosh awesome I'm gonna buy jeeps you know and then come to find out when you go to trade in these cars they actually don't have the best resale value out there so then I really started paying attention to you know the brands that I was moving towards like BMW and mercedes-benz which cars they had sitting on their lot taking up space that they were marketing to sell and I noticed you know when I went to mercedes-benz I would see like a Porsche Panamera I would see a Tesla I would see a BMW so there are certain types of cars that they find value in that they think that they could get more money for and finance and you know moved them off therefore rather than sending them to auctions so those ones tend to have a better value for you as well when it comes to trading them in and then finally with all that said you know I cannot emphasize enough how important an exit strategy is now I know that there's a lot of people out there that their strategy is to just get these cars and to hang on to them for the term of their loan which is you know usually five or six years whatever it might be but my only thing that I would caution against for that is that you are competing in an ever evolving marketplace right so naturally as your cars age not only are you gonna run into maintenance issues which most people generally don't have a plan for so that's gonna turn into a giant variable cost and you just really can't anticipate that but then eventually as time goes on you're gonna be competing against people who have new or year's makes and models like even right now today if you go right now and do a search for your area for twenty twenty vehicles there's a bunch antero I did a search today for twenty twenty cars in my area alone and I saw there was a couple hundred listings so people are really they're coming in they're coming in with newer cars nicer cars so for me personally that's why I never kind of went with that strategy because I just felt like it wasn't gonna keep you competitive and over time you're gonna have to drop your prices you'll have more costs and maintenance and you can't compete as much so it would turn into a losing proposition eventually so that's why I've gone with a strategy that I've talked to you guys just now and I would really really really emphasize to please think about that exit strategy that roughly eighteen percent off of MSRP keeping your APR low between one to three percents ideal and then picking cars that also have really great tradin or resale values so that you end up with the value when it comes time and then other than that the last thing that I can share with you guys when it comes to purchasing cars probably the biggest tip that I have going to dealerships and you know I've been to so many of them over the years is when I go to a dealership I always look for their top salesperson or sales team so whoever that is and the reason for that is because usually these people they are more into moving quantity versus you know charging someone or trying to get as much as they can for the car they're moving units and as many units as they possibly can so they tend to be more motivated to get the deal done and get you to your numbers so that they can move that unit and have that under their belt I've also found that these people are more in sync with financing so they more or less already know how financing will view the deal so it's very I I feel like a very straightforward process when you go to these top salespeople because they already know they're trying to move a unit they try to move quickly and they're just trying to get you to where you're trying to be and try to move that unit so that would probably be my biggest tip if you're walking into a dealership work with the highest-earning salesperson or sales team and they will likely get the job done for you all right guys I know that that was a ton of information hopefully that brought you guys some value and answered some questions about how people buy multiple cars thinking about leases and some of these other ways of doing things like corporate credit and things like that those are entirely giant subjects of their own so I'll definitely get some content down on that as well and I could share with you guys what I do know but yeah hopefully this is helpful and kind of clarifies how some people or most people are doing the turo business yeah I think that's it that's all I can think of for now but as always send your questions and comments thanks for watching once again my name is Simon this is Simon's experience don't forget to subscribe to my channel I am trying to get to 10,000 subscribers and it would be so super helpful if you guys could get me there alright guys have a great rest of your night I am up for the evening take care bye guys

Channel: Saimah's Experience

Views: 359,936

Keywords: turo, Turo Saimah, Turo car rental, Saimah turo

Id: fHVgrQd04uk

Length: 21min 52sec (1312 seconds)

Published: Fri Jan 31 2020