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Lessons Learned from a FAILING TURO Rental Car Business - YouTube
Channel: Normal Guy Supercar
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good more YouTube today I'm gonna tell
you about the lessons I learned failing
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at my tarot rental car business got my
shop dog Bo with me yes he's gonna help
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me with the numbers and with my
emotional support because it's gonna be
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rough hi mo hi what you doing huh I know
you're looking for food there's there's
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a whole lot of food in here sorry buddy
oh yes all things got a little bit of a
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well so either of those things you got
chance of winning was cool cluck stuffy
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new to this channel my name is Dan that
was my dog Moses he's helping me out
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here in the shop we do a lot of fryer
stuff I just you know me to allow DIY
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interests probably should subscriber at
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least check out my other videos and I do
appreciate that when you guys D
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subscribe so thank you and hit that
thumbs up button so my friends and I we
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started a tour rental car business it
ran it for a little over a year we only
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have one car left in the rental platform
that's my Corvette all the other cars
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have either been sold or pulled out of
the rental system so I'm gonna explain
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to you why brand new cars I'm Toro is
actually not a very good idea it seems
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like it is at first but it's actually
kind of crap and I know a lot of people
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are like all bad you guys are idiots you
didn't have a business plan to blah blah
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they gave me a bunch of grief for the
last video but people are making a lot
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of subjects so first of all we actually
planned this business out for three
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months before we even started so there's
four of us involved and a lot of people
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like why do you have so many partners in
the business part of that was our plan
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was to have eight cars two cars per
person which would give us a lot of data
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and a lot of diversity in our rentals
that also helps out because then when
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one of us was traveling for business or
whatever the other person could take
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care of the rental and things like that
plus each of us had a bunch of different
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skills that we brought to the table so
for example one of the partners he was a
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licensed car dealer here in Texas so we
bought most of the cars at auction or
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wholesale so we got extremely good deals
on these cars so we weren't like just
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going out and buying random cars
another example is one of the other guys
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actually wrote a program to scrape the
data from Turo and do our own machine
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learning kind of algorithm
and determine what cars were the best
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are aligned so we went into this rental
business with our eyes wide out but we
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had a good plan and we had really good
data so we could use this data that we
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compiled to kind of have a good idea of
what cars we thought would do best and
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actually our data was fairly accurate
based on the data we had the cars that
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we bought we knew kind of which ones
were going to perform the best and
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frankly they all performed pretty close
to what we assumed so that was at least
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at first and that actually brings us up
to you one of the first problems with
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running your cars and taro is throws at
control they can change the game anytime
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they want they can just arbitrarily
change the rules and that happened to us
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multiple times and the rule changes
actually dramatically impacted our
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revenue and that was one of the biggest
things was we've at first made a bunch
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of money and then eventually we weren't
making any money in fact we were losing
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money and par that reason is when we
first got going Towe had three different
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insurance plans and we took the mid-tier
which seemed like a good deal but then
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ternal changed the policy and how much
the mid-tier cost went up by another
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five percent effectively making it so
that no longer it was a reasonable
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decision and so you should go to the
maximum plan which then makes it site
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you're not making as much money Toros
cut got bigger and bigger and our cut
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got smaller and smaller that's just one
example another policy that they changed
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is they added a twenty five dollar
cancellation fee for any reason if we
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cancel versus the renter's could cancel
all the way to within 24 hours of the
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start of their rental period with no
penalty whatsoever that kicked our ass
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because people would book our cars for
like a week and then the day before the
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rental they just cancel it again there
might change my mind so those sorts of
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things would crush us they would
absolutely hurt our business so during
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our one year period of running this
business we had well over 200 rentals
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and we actually pulled in over fifty
thousand dollars in revenue what you
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think that's pretty good we have eight
cars $50,000 that's not bad well the
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cars ended up costing us more than
$60,000 in our payments and stuff so
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that was part of the plan was we wanted
to buy cars that we actually wanted
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ourselves we didn't want to buy crappy
cars because that just didn't seem
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appealing to us so he bought high end
luxury cars or sports cars and we
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financed all of them that really really
low rates through the banks what's
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better than using your money for an
investment is to use someone else's
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for investments so that was our policy
and that's what we did based on the data
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that we mined we assume that these cars
should be able to break even or make a
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slight profit pretty much all the time
and it like I said at first that was
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true and then that kind of went away and
it basically at this point all of our
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cars no matter how good they were
performing are losing money and so we
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decided to kind of fold the business in
it wasn't worth it so actually brings up
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one of the first tips I'm gonna say is
if you're gonna do this turtle thing
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which don't do it you shouldn't but if
you are the first rule is you cannot buy
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cars that you are emotionally attached
to so buy cars that you literally don't
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care about and a lot of these people who
are like hey I want to go buy a Corvette
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and then kind of get some subsidiary
income to help offset the cost to write
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in it don't do it because that's
probably your baby you probably really
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are gonna love that car
and you'll be really pissed because this
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comes to rule number two which is every
single one of our cars all of them have
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been damaged it's not necessarily big
damage we're not talking like you need
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to replace fenders and like that but
scratches dings door dings messy
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interiors anything like that it's going
to happen 100% guaranteed it happened to
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all eight of our cars it will happen to
your car it's just a matter of time so
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accept that your car is going to get
damaged
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don't be emotionally attached to it
those are very important rules so
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another thing that people have asked is
couldn't you lease a car and make more
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money that way because the payments are
cheaper probably but probably not I'm
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sure it's probably against the lease
contract and if you violate that I don't
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know exactly what happens the second
thing is you're putting a lot of miles
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in these cars so when people rent these
cars they drive them pretty much every
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time we rented our cars we had 150 miles
daily limit and these cars would almost
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always get get to that limit or exceed
it if in fact people went over on the
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miles very often we're talking 150 miles
a day on these cars when they're getting
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rented so if you're running about
frequently you're gonna get a lot of
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miles they're just good to get a lot of
miles so the leasing thing probably
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isn't gonna play out and that was
actually another part of the plan was if
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the cars could just be break-even and
that basically meant that they were
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buying us an asset and at the end of the
game we could sell these cars and have
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this tangible asset that's worth
something catchy is that the cars are
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devaluing pretty hard getting way more
miles than we initially anticipated and
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then oh hello someone's uh collected I
know I know mr. mill so ultimately if we
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got these cars for free
sold them at some point yes we could
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have made some money on that but you're
talking to the cars that are now worth
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fifteen twenty thousand dollars after
four or five years of making payments on
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them in the meantime you've worked your
butt off if you think about that making
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fifteen twenty thousand dollars for four
or five years of an investment isn't a
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very good return based on how much money
we put into it well so here's some of
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the ultimate problems with Tarot is that
number one it's all about high
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utilization so that means it's kind of a
race to the bottom in order to have high
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utilization you have to have some of
cheapest prices in the market and so
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that means everyone's putting their cars
at lower and lower rates to compete with
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each other and that's actually one of
the biggest problems is you've got a lot
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of dumbasses can't entering the market
putting their cars on tear-out that
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haven't done the math so we did the math
and we basically said okay this is the
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lowest amount of money we can charge per
day and actually have the cars be
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profitable based off how much money the
cars cost us plus insurance and all the
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other things in factoring and
depreciation and so on so on and other
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people will come in and undercut us by
10 20 30 even 50 dollars a day or more
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who wants to rent the car for $150 a day
when there's another one it's the same
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car for a hundred dollars a day even
though maybe they've got crappy reviews
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it's worth the risk right so that became
a problem is that we kept having more
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and more people entering the market it
got more and more competitive and the
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prices just kept going down and down and
down so ultimately that meant that we
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had to keep lowering our prices and our
profit margins went to zero and then
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became negative and on that same point
another big problem is we were a
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business and we're competing with
individuals some guy goes out buys a
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Corvette and says hey I want some
subsidiary income to help offset my
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payments he doesn't really care about
making a profit he just wants to get a
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couple hundred extra bucks a month to
make his payments cheaper so when you're
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a business competing with an individual
it's impossible because the motivations
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are different and therefore the
requirements on the finances are
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different now ultimately that guy's
going to be screwed because people are
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gonna be beating the crap I was car
putting damage on it lots of miles and
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depreciating his asset but in the
meantime he doesn't really care as
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payments are being made versus we're
trying to make money so kinda isn't
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really working for us
another major tip is if you're gonna
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make any sort of money you probably need
to be located very close to the airport
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because of two factors one time and two
travel costs so we frequently do
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get Airport pickups and the problem with
us is that we're far from the airport
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all of us all four of the people in this
business so for us to do it the airport
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drop-off we were having to take uber
rides that were costing us 30 40 even 60
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to 70 dollars back home and especially
when you're talking rush hour pickups
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and drop-offs then we're talking 45
minutes to an hour hour and a half one
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way so start becoming really painful we
would talk about two hour drives just to
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get the car dropped off plus forget
charged another 60 70 bucks from uber
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Turo limits the amount you can charge
for pickup to $120 so first of all who
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wants to pay $120 our drop-off fee and
second of all that that meant that we
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basically would lose money even on those
pickup fees so it just became pointless
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for us to do airport drop-off and pickup
stuff and we eventually just stopped
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doing it entirely so if you're gonna try
and make any sort of money at ro you
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really have to be close to the airport
and you have to make sure you can do it
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effectively getting in and out anytime
day or night another thing to remember
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is turtle is not on your side Turo is
there to make money for Tura
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so when we had issues we contacted Toro
support they did not signed our favor
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very often in fact usually we had to
have big arguments
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it's absolutely paying the butt so
you're talking tons of time the phone if
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you're gonna be doing this term business
you're gonna be on the phone with Toro a
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lot not just even support but also when
you have stupid renters we've had
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Brenner's do some really dumb things and
we've had to have long phone calls with
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taro to explain situations and make sure
we didn't get our butts kicked by fees
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or whatever's stupid things like I've
had renters who came in from out of the
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country and they rented it under the
wrong name and so I legally couldn't let
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them take the car because then it would
be uninsured and blah blah blah
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it took me like three hours on the phone
and I did all this work and then the
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renter takes the car it turns out he's a
total asshole and abuses the car and
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complains to me and actually he damaged
the car and all this started it was just
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tall paying the button here I spent all
this extra time trying to like make the
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experience good for him that's another
big problem is you are at the mercy of
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these reviews from people who are kind
of jerks the majority of our renters
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were pretty good people but I think
that's more of a function of we were
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running high in cars so people who are
willing to pay 150 to $200 a day
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typically aren't these low caliber as
they call them in the Terr business
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shooter rentals there's a lot of people
in the trail business that go and they
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buy a ton of really cheap like five to
ten
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Miller cars and that sounds like misery
to me because the people who want to
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rent them don't care about the car and
they're gonna abuse these cars they're
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not gonna clean the cars and take poor
care of them and now you have to be
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costly running around taking care of
these cars maintaining them making sure
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they aren't breaking and whatever
whatever if that sounds like something
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you want to do if you want to have a
fleet of 30 ship boxes that's a way you
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could probably make money intro but then
you're a slave to this whole system and
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that sounds really miserable think about
the math behind having 30 cars if it's
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just you you'd have to hire some people
to take care of him and that also
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becomes another one of the big problems
is if you're gonna try to make money and
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you have a big fleet Turo does not have
tools to help you effectively if you're
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a business with multiple cars versus if
you're an individual
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they're designed to have individual
renters and individual owners not
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businesses so as a business is very
complicated it gets tough because they
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don't have any sort of like multiple
logins and stuff it's just one account
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it gets really complicated the
communication because it's very
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difficult is it paying the bus so one
last quick tip I'm going to tell you to
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save your butt if you're doing this tear
thing is take a shitload of pictures
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before and after and make sure you do it
within 24 hours before in 24 hours after
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the rental I'm talking like 60 70 80
pictures not the ten but they recommend
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they only say like take ten pictures or
whatever I would take 6070 pictures
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close-ups of everything close-ups of the
wheels close-up some of the tires
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close-ups of the steering wheel
dashboard every single panel and then of
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course I'd take wide shots as well
everything could take up there's
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pictures of everything and it's in your
interest because if they don't have
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proof they denied the claim and you're
screwed and there's nothing you can do
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so remember Turo is out there for Turo
they're not in your interest so protect
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your ass take a ton of pictures make
sure you're doing that every single time
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and don't wait if history continues to
prove itself correct you can expect a
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few things one more and more dumb people
are going to enter the market and
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undercut it and the prices are going to
go down so there's gonna be more and
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more competition the price doesn't keep
getting lower the profit margins are
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getting narrow narrow to Toros they keep
changing their policies in favor of
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turell's so that means it'll be harder
and harder to make a profit is to get
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tougher and tougher to kind of have them
settle in your favor when things go
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wrong and the policies are to keep
getting worse and make it more in there
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favors those things I pretty much can
guarantee you're gonna happen so expect
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that the only way it's not going to get
worse is if the people who are right out
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there cars get pissed off and form a
union or something I don't know so
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ultimately I don't think Thoreau is a
good plan if you're expecting to make
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money if you're an individual and you
want to make a little bit of subsidiary
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income and you're willing to risk your
car and basically say yes I am accepting
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that my car will be damaged and abused
and have all these bad things I don't
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really care about the car then go for it
but short of that don't run your car
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interim it's a terrible idea
we had a really well-thought-out
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business plan and it just didn't work
and it just proved to be a total
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nightmare tons of work absolutely tons
of work for very very little reward you
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can do many other things in the car
world that make a lot more money for far
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less energy and far less risk than
renting a car in turn so I'm sure now a
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bunch of these people who are currently
ran their cars on tour are about to put
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their comments below and be like yeah
I'm making money
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I've had people actually contact me on
Facebook and DM me on Instagram stuff
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complaining I don't know what I'm doing
and blah blah blah so whatever bring it
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on bring it on hope I'm saving some of
you guys from making a bad mistake
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that's really the goal here is I don't
want you guys to make the same mistakes
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we did don't do it it's bad idea it
seems like it's a good idea they Turrell
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makes it seem like you're gonna do
really well and make all this money it's
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gonna be a badass thing it's not true so
just don't do it alright guys hopefully
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enjoyed this and if you did please again
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