I never knew how badass Teslas were. My friend at work is a Tesla fanatic, and we got on the topic of buying one. He explained so many of the perks— how they drive, how fast they are, how the doors come up, etc. I was genuinely impressed.
Then we started talking about the prices, which weren’t unreasonable. However, once you start adding in features and the self-drive package, they can get pricy. Considering that the last car I purchased for myself cost a total of $7,000, anything more than that seems expensive.
My friend also said he had used Turo rental car service to test drive a Tesla in California. I have already written many articles about how this would be the best way to buy a nice car. My last article on the topic was “Start a Luxury Vehicle Business.”
Y.B.E. Young Brilliant Entrepreneurs
I figured I would write a more detailed version based on a super Tesla. The reason was that we looked up Tesla rentals in my part of Florida, and they were going for $330/day. Wow. And this was for one of the less expensive models.
There is a market for Teslas in the rental car business, and entrepreneurs aim to leverage what the customers want. So let’s get into the play-by-play of how I would start this business. There are many YouTube videos from people who created these types of companies. I encourage you to do a deep dive on the subject. Also, you can try the service out with your current vehicle and see the pros and cons. Here we go.
1) Start an LLC. I would incorporate my rental car business. Starting an LLC would allow me to leverage business deductions and also isolate the stream of income. Yes, there is more of a headache, but overall, you would be able to write off more of the service’s day-to-day operations. I plan on finding a lawyer and accountant that specialize in these types of businesses as soon as I get home.
2) Obtain financing. I have not got a chance to start my S Corporation, which would own my various LLCs. (read “Establish Business Credit Now”). Once I form all my corporations, the banks would still use my personal credit history because I haven’t built everything out, which wouldn’t be wrong. If you have bad credit, start rebuilding as soon as you read this. Good credit will allow you to expand this sort of business faster.
Mothers as Entrepreneurs
3) Do math. Yes, I know that you do not like to do the math, but in this case, it is vital. You always want to make very conservative assumptions. We wish to input three numbers into our formulas: the cost of debt service, the cost of maintenance and operations, and the number of rental days.
This picture is from my neck of the woods in Florida. So let’s make our assumptions.
Cost of debt service: I would start with a car in the $60,000 range. There is nothing wrong with starting conservatively. If I obtained a loan at 5%, it would cost me $1,132/month.
Cost of operations and maintenance: Remember, from the article “Taxes 102”, businesses calculate taxes on profits after deducting income and expenses. So we want to list all our gas, maintenance, car-washing, insurance, etc. Let’s figure this $600/month. In a perfect world, I would use my personal vehicle for a few months to get more accurate numbers before purchasing anything. That’s just me, though.
The Invisible Budget
Total days rented: I have no idea how intense the Florida Tesla rental car market is, so I would be taking a shot in the dark. Again, perform your market research before making a purchase and locking yourself into anything. I will continue to go conservative— I will use 15 days a month at $180/day.
Total profit: Doing all the math, we can come to this rough conclusion. Gross revenue ($2700), minus debt service ($1,132), minus operations and maintenance ($600), equals $968.
So being conservative will net us $968/month. That is a nice load of money, but we still have more work to do.
4) Automate your business. The goal of your business should be for it to run without you. There are three kinds of automation: automation via systems, out-soucing, and management. In this particular case, I would leverage my family connections. I have a son that will be coming into the age to run a business like this.
Cash Flow 104: Create Your Long-Term Strategy
Will he make a mistake? Yes. However, this is the perfect kind of business for a young man to oversee. He can even save money by washing the cars himself. The primary constraint with Turo is that someone has to drop off the car to the client.
There are ways around it that I have seen on YouTube. You can leave the car at a nearby Walmart or similar shopping area. You would have to get permission, of course. Tesla has auto-locking/unlocking and such, plus tracking.
Also, my son could drive the car to the meetup and then take a uber home. You can account for this extra cost by increasing the price per day. Or he could hire a friend to follow him to the destinations, probably the safest way, and pay him $10 a trip.
You see, when you start a business, you make the rules. That is the advantage of becoming a boss; you can put your people in a position to succeed.
5) Count your passive income. Since I decided to automate my business via my son, I would be paying him the lion’s share of the profits. I don’t need the money, just the ability to diversify my income across a physical business. You see, when hard times hit, those who have done the research and took action will have ways for continued success. That is why it is vital to launch small businesses. It is not the money but the opportunity and diversity.
Start a Home Business
Anyways, If we were netting $1,000/month profit (I think it would be way more than that), I would pay my son $700. That leaves $300/month for my wife and me. Not bad for probably one month of work getting set up and running. My son now has a nice stream of income. If we calculate that it took him 20 hours total to monitor 15 days of rentals, it will come out to $35/hour. Not bad for a young chap.
6) Expand your business. We own 3 acres of land and have a ton of space for more vehicles. Again, the primary constraint is that we would need someone to drop off the cars to the clients. Once we solved this roadblock (and we would), we can open the doors to obtaining more vehicles. I am eye-balling the new Ford Bronco or a nice Jeep. We live in a spring break town, so anything convertible would do amazingly well.
The best way to expand would be to pay off each vehicle and buy the next one; that way, you don’t get into trouble in a downturn. It may be a little slower, but if the numbers are higher than we predicted, I see no reason not to be able to pay off a car every 18 months.
Print Your Own Money
7) Pat yourself on the back. You have done something 90% of Americans would not do; including researching, reading, evaluating, performing math, and taking action. I am proud of you, and your future self will be proud as well.
I know that I make it sound easy, but honestly, what is complicated about this? Sometimes you just have to look at the worse case. The worst case is that there is no market in your town. From there, you can look into other options. Do you have friends and family in different areas that could leverage the vehicle? If not, you can use the car as a daily driver. Maybe you can loan it to an Uber driver for use.
The car is still an asset, and you can leverage it by using your brain. One last point, although the vehicle is an asset, your ability to think critically is the biggest asset in the world. Thinking will produce you the most amount of money in your lifetime, so always work on making yourself more innovative and more well-rounded. You can do this by reading. On that note, I bid you ado. Also, check out my new article called “20 (More) Books That Will Make You Rich.”
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Disclosure: I am not a financial advisor or money manager, and any knowledge is given as guidance and not direct actionable investment advice. I am an Amazon Affiliate. Please research any investment vehicles that are being considered. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
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