Airbnb vs. Turo: 10 Crucial Things to Consider Before Investing in Either One

Aribnb vs. Turo

If you’re looking for a side hustle to invest in, you may be wondering: “Airbnb vs. Turo?” Both are rental platforms that let you share your space or vehicle for a profit, allowing you to generate good passive income. They’ve been making millionaires out of their owners, and it’s high time you started looking at them seriously.  

Since Short-term Sage is a vacation rental site, we’ll assume that you’re  familiar with Airbnb. You may be  also be acquainted with all the ins and outs of short-term renting already. So in this post, we’ll focus a little more on Turo.

Turo Car Rental

In case you didn’t know, Turo is a peer-to-peer car-sharing platform that lets you book vehicles directly from owners across the country. That’s individual owners, not companies like Hertz and Avis. The app, just like its rivals GetAround, HyreCar and Avail, connects owners with renters.  

Is Turo a good investment?

If you own a vehicle that you don’t use every day, you can monetize it by letting others borrow it for a day, a few days, or a full week.  

You set your own rate and mileage limits.

According to the company, Turo now has more than 14 million users and 450,000 vehicle listings in 5,500 cities across the U.S., Canada and the United Kingdom.

Airbnb vs. Turo

Turo:  Airbnb for Cars

Turo is like Airbnb for cars because, as a booking platform, it lets you book any vehicle of your choice directly from the owners.

Both have user-friendly interfaces and let hosts screen their renters thoroughly. Both companies also provide tools that providers and clients need: assured transactions, liability insurance, and dispute arbitration.

Many Turo renters, like Airbnb guests, tend to look for a unique experience rather than the standard pick-up-at-the-airport routine. They may be looking to borrow a unique type of vehicle — a 4-wheel drive or a Tesla with falcon wings. Or they may request the host to drop off a vehicle at their hotel instead of having it wait for them at the airport terminal.

And, like Airbnb guests, Turo clients use Turo’s services for both travel and daily utilitarian uses. Some renters are interested in e-vehicles and will rent one for a week to try it out. Others simply borrow a car to run an errand or pick up an oversized item from the store.

Airbnb vs. Turo:  Which One Should You Invest in?

Let’s look at the various factors that you should consider when choosing between Airbnb vs. Turo.

1. Capital

Cars require much less capital to acquire than homes. Unless you’re doing rental arbitrage, which allows you to manage a property with little to no monetary investment. But with real estate, you could lose hundreds of thousands of dollars if you don’t make smart decisions and end up purchasing and managing a property incorrectly.

Acquiring a vehicle can be a lot easier and quicker, too.  You can get a car in just a few days — sometimes hours — even if you’re not going to  finance it. (Look into rent-to-own or other means.) There won’t be a lengthy process of getting a mortgage, signing contracts, and waiting for all the paperwork to be done.  

2. Location and market factors

If you live in a city or town with high visitor traffic, and especially if you’re near an airport, that’s a huge advantage! The chances of getting booked on Turo will be high, especially if you have a nice car and good insurance coverage.  

But because of Covid-19 and the spike in remote family vacations, large 4X4 SUVs now have a good market in wilderness destinations. If you live within driving distance from national parks, investing in an off-road vehicle that can seat 6 or more people is a great option. A Montana host makes up to $5,000 a month renting his 11-year-old Lexus GX460 on Turo, and a Hawaii host makes up to $2,000 a month on each of the 10 Jeep Wranglers and Gladiators he rents out.

Of course, tourism-related demand may depend on seasonal highs and lows, as well as factors like pandemic restrictions and economic slowdowns.

Study your market carefully. There are cities where people would prefer renting than owning a car for daily use. They may not have the cash or good credit to buy one, so they opt to rent for months on end.

You can use Sharelytics to get data and analytics on competitive listings, real-car valuations, lucrative locations, and other relevant insights.

Airbnb vs. Turo

3. Cash flow

Turo’s website says hosts average $706 per month. And Airbnb hosts are reported to make around $924 per month. Both figures depend on various factors.

Your bookings on Turo — and therefore, your earnings — will be affected by your location, market demand, your car’s model and quality, pricing, availability, and insurance plan.

Occupancy at vacation rentals depend largely on rental location, seasonality, and maximum occupancy. The number of properties a host manages and the saturation of Airbnbs in a given area are also big factors.  

So you can’t judge by the numbers alone. There are hosts who rent both on Airbnb and Turo that say their cars are earning more money than their Airbnb units.  

It all depends on a combination of many different elements.

As for the commission fee, Airbnb gets only 3% commission, but Turo gets 15-40%, depending on the insurance plan you get.

Read also:  Don’t Start an Airbnb Without Answering These 8 Questions First

4. ROI and Scalability

Calculating the ROI on your car can be quite complicated. Again, it’ll depend on several different factors:  the kind or class of your vehicle, its purchase price, the daily rate you’re going to charge for it, and its usage rate. Other variables such as insurance and maintenance costs need to be factored in, as well.

Turo has a calculator to help you gauge how much ROI you can expect in a year’s time.  

If you’re willing to spend for a brand-new unit, look for their list of top 30 recommended vehicles on their website. It’s based on ROI potential:  10 for budget models, 10 for mid-range, and 10 for high-end.  

Their buying guide also says acquiring cars at a discount is critical to maximizing your ROI. An all-star Turo host in Atlanta, GA, Stefan Marquardt, made $60,000 in his first year by buying lower-valued vehicles at auction. He made it a personal goal to achieve his targeted ROI on every car per year — which he did. He also made it a point not to touch his profit, but put it back into the business and use it to buy more cars and increase his fleet. So he was able to scale to 13 cars in just 2 years’ time. 

Marquardt feels Turo renting is a business that’s scalable because you can systemize your operations, hire employees, and do minimal work — yet still make a good profit. At first, you’d have to put in a lot of work, of course. But if you’re methodical, meticulous, and plan your operations carefully, he says, you can eventually remove yourself from the daily grind.

Another successful Turo host is Heather Loree in San Diego, CA who estimates her hourly ROI at about $80-100 per hour. She says she and partner Joe Fier were breaking even on their 3 rental cars each month in 2018. Their Turo earnings were already covering their auto loans, insurance, and maintenance costs. 

Airbnb vs. Turo

5. Equity vs. Depreciation

Cars are depreciating assets. They lose value over time and mileage, so you can’t expect to earn a profit if you decide to resell them in the future.

However, rental properties appreciate in value over time. If you keep your rental property for only 2 to 4 years and then resell it for a profit, you can gain a bonanza — $50,000 to $75,000, sometimes even a hundred.

Another advantage of home renting is the equity you can build. Whenever you pay your mortgage, you’re paying down the balance and creating more equity.  

Even if you’re just doing rental arbitrage and have only a bit of equity, if you start scaling and getting more rental properties, that would increase your net worth. A rental property is an appreciating asset, and the more assets you have and the higher your net worth is, the more people will lend to you and your business.

Read also:  5 Simple Strategies for Financing Your First Airbnb

6. Maintenance

The majority of renters on Turo borrow vehicles on a per-day basis. So as a host, your cleaning and detailing duties will often come daily, too.  

On Airbnb, guests would rent your place for weeks, sometimes months at a time, eliminating the need for frequent cleaning and turnovers. (But you’ll still have electric, utility, insurance and tax payments to take care of.)

And when it comes to routine maintenance, the need will be greater with cars. Oil changes, new tires, new brakes. If yours is a relatively new vehicle and renters use it only within the city, you shouldn’t have much problems. 

But automobiles are mobile machines. And the need for maintenance and repairs increases with mileage and the daily wear and tear. Cars are more easily damaged than homes, and accidents do happen. Bear in mind that you’ll have to shoulder for crashes and wrecks.  

With rental homes, as long as you’re able to vet your guests properly and prevent wild parties from taking place, you’d most likely avoid a lot of damage.

One thing about insurance, though. While Turo’s got your vehicle covered (so has Airbnb your home), the reimbursement you can expect for a major damage or wreck will likely be a lot less than what your car was really worth. The undervalue may not be as bad with real estate though.

Airbnb vs. Turo

7. Storage location

This may be an incidental cost you’d have to deal with when it comes to cars — and something you’ll never have to worry about with real estate. As you scale with Turo, you’ll incur additional costs because you’ll need a bigger space to park your fleet. You’ll likely have to lease a garage or open lot. And in big cities, parking space costs A LOT!  (Pun intended.)

8. Exclusivity

Unlike Airbnb, Turo prohibits car owners from hosting on other platforms. You can’t list a vehicle that’s currently listed on another car-sharing site. And if you list one on Turo, you won’t be allowed to list it on any other platform. That means you’ll depend exclusively on Turo for the profits of vehicles you’re renting out on their site.

9. Longevity

Traditional car rental companies have been having a shortage of vehicles since they slashed their fleets during Covid-19. Turo hosts, meanwhile, were able to leverage the situation and saw consistently good bookings since. They can only expect to see their business thrive in the next couple of years.  

Since travel rebounded in the Spring of 2021, 73% of hosts who listed at least 3 cars on Turo say they saw an increase in bookings since the start of the year. And 70% planned to purchase another car to rent on the platform within a year.  

Airbnb vs. Turo

10. Market cap

In 2019, the American media holding company IAC invested $250 million in Turo. That funding brought Turo into unicorn status and past the $1 billion valuation mark. Then, last August, the company filed confidentially for an IPO in the U.S.

But, according to TechCrunch, the car-sharing platform didn’t have a completely smooth ride during the pandemic. Like other transportation startups Bird and Getaround, Turo laid off 30% of its workforce in 2020.

Turo-Airbnb Partnership

In 2021, Airbnb and Turo teamed up to help hosts on both platforms capitalize on “revenge travel” and make extra income that summer. People were itching to travel after a year of lockdowns, so the two companies published a list of Top 10 Hottest Markets for travel — which equates to the “hottest markets for home-sharing and car-sharing” as well.

Read also: The Best Markets to Invest in Airbnb — 5 Important Criteria to Use

The Bottom Line

It’s often said that 90% of the world’s millionaire’s built their wealth by investing in real estate. There’s no question about that. Real estate investing is still one of the surest ways to create good, sound wealth over time.

But with both the home-sharing and car-sharing models showing good returns, why not consider doing both? If you’re already on Airbnb, think of Turo as an extension of your hospitality business.  

If you’re working from home, hardly use your vehicle, and have flexible time for drop-offs and pick-ups, rent your car out on Turo. You can make extra income from an underused asset just sitting in your garage. It’ll pay off the loan (if not yet fully paid) and you can save up for a new one. Then you can start building a fleet.

But if you haven’t tried any one of these two gigs, at all, look into rental arbitrage. It’s a great way to build a fortune on Airbnb without owning any property. Nor money.

We can teach you how

We built & operate a $2M/year short-term rental business, operate properties throughout the USA remotely, and acquired 70+ properties without owning any in just 2 years.

Attend our free online master class to learn how you can do the same. Click here.

Now, think about the first question that led you here in the first place: “Airbnb vs. Turo?”

Read the above factors again, weigh the pros and cons, then do some further research.  

You’ll find your answer soon enough. One that fits your personal situation, financial goals, and geographic location.

Read also: Hotels vs. Airbnb: How the Hotel Industry Tried But Can Never Destroy Short-term Rentals

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