105 RULE 1 TAKEAWAY
The Big Takeaway from Rule #1
It is important to understand depreciation.
If a car is purchased at the wrong price, rented on Turo, and depreciation is not considered, then all of the profit can be washed out over time.
I believe profit can be made with any class of car if it is purchased at the right price. A cheap car with high miles is not always the answer.
How do I determine the purchase price?
Before I purchase a car, I investigate how many miles it is expected to drive and how much it is worth at each stage. My goal is to identify the perfect amount of miles to buy the car and sell the car. I’m looking for a 30-50 mile gap that the car is going to depreciate a reasonable amount that will not unreasonably reduce my profit over that time period.
How do I figure out the depreciation?
First, I do a quick Google search to understand how many miles the car is expected to run, common problems the car has, and when to expect them.
Then, I use a site like Kelly Blue Book to determine a cars value at various miles. From there, I determine the best time to buy and sell a car.