Are you looking for ways to produce a revenue stream without actively having to work at it? Consider one way by renting your vehicle out to someone with the purpose of using it with a ridesharing service like Uber or Lyft.
I will be showing you two ways to do this, either through a renter having a direct contract with you or by using a third-party service like HyreCar that handles the contract and auto insurance for you with access to several drivers in your area.
Direct Contract
Sometimes people are afraid of contracts. There are several templates online and there are professionals you can tap into. Ask anyone in your network of friends that may be a contract lawyer or use a service online like Legal Zoom to review your contract. The benefits of having a direct contract with a renter are that you can determine specifics of vehicle rental as well as how much you would like.
The contract needs to cover the important pieces of Who, What, Where, When, Why, and How. Here are some to consider for each piece:
- Who – Detail out who is renting the car and who that renter is getting the car from. A recommendation is to make sure you are a legal entity to protect your assets. LegalZoom can assist with this as well.
- Why – Define why someone would rent your vehicle – for the purpose of using for a ridesharing service.
- What – Detail out the and any details needed from the renter. Some items can be:
- Vehicle make, year, and model
- Maximum miles per rental period
- Details of deductible they are responsible for in case of an auto accident
- Details of expectations to keep the vehicle clean.
- Where – Define any limitations for the renter for where they drive. Do you want them to drive out of state with it? Make sure you describe it remains in the state and counties that are in the area. Also, describe pick-up/drop-off for the vehicle when the contract starts and ends.
- When – You can set your contract period, it can be weekly, monthly, or yearly. This gives enough time for a renter to use the vehicle and let them decide if they want to continue with it after the period is up.
- How – Describe how the Renter pays you and how much.
Example: Renter pays Owner $250 per week on Thursdays, by 5 p.m. via Venmo/PayPal- Detail out the different “What Ifs” that can occur when for the renter when using the vehicle. What if:
- I get a parking ticket?
- I get into an accident?
- I decide I want to end my contract early?
- I accidentally damage the interior/exterior?
- Detail out the different “What Ifs” that can occur when for the renter when using the vehicle. What if:
Auto Insurance
This is the most important piece as it covers the vehicle and people in the car. The driver needs to be on the insurance policy. Their driving record is the main factor if the premium is high or low. You can factor this into what they pay you to rent the car.
There’s quite a bit to consider, but just cover your bases and have a professional review your contracts. They may recommend something that you didn’t think of or that one of the templates you found that it missed to consider. Make sure you fully understand the contract and that the renter fully understands it before executing signatures and starting the rental. Direct contract with you allows you the most control of how you want the vehicle to be rented out and for how much.
Third-party Service
An alternative to creating your own contracts and adding the person to your auto insurance policy, consider using a third-party service like HyreCar that takes care of this for you. The great thing about this is that there is a pool of Renters that are looking for a vehicle in your area, you just have to post up on the HyreCar website that you are interested in renting out. In exchange for their service, they will take a portion of the rental fee. It varies but averages between 15-20% of the rental fee.
Look at what the car requirements are and then create your posting. Once a renter is interested in your vehicle, you set up a time and location for pick-up and return, as well as how long it is convenient for you to have your car rented for. Some can be short as a day, some as long as a month. Rent your vehicle for as long as you like and once returned, receive the deposit into your bank account within a few days.
Deductible
The one thing to be aware of with HyreCar is the high deductible for the auto insurance agreement and how they collect from a renter in case they get into an accident. The Renter has a $2,500.00 deductible and they can pay in installments. That means the HyreCar auto insurance policy can repair damages to your Vehicle, but you will have to foot the bill of the deductible until the Renter pays it all back.
Conclusion
Renting out your vehicle for passive income is a revenue stream that people have found to be very beneficial. Contracts can be scary but cover your bases and understand the agreements between each party. Get your contract, auto insurance policy in place, and find a renter. You may find that this type of income without having to work so much at it to be very rewarding.
If you would like other methods of creating passive income, check out Buying Real Estate for Passive Income. I’m sure a combination of renting your car and a house or an apartment would greatly increase your income and available time.
