How my best friend's uncle made his fortune.

[stevechang202]

Hello,

My best friends uncle made a fortune in an unusual way that was a hybrid of entrepreneurship and investing.

He started out as a cab driver in a west coast city. After saving some money and borrowing a bit, he managed to buy his own taxi cab ( both the physical cab and the medalion). He then borrowed some money to buy another taxicab (both the physical taxicab and the medalion). With the cash flow from that taxi, he then bought a third and repeated the process until he had one of the largest fleets of taxis in this city.

Eventually a high tech company moved in and the demand for taxi services increased. Since more money could be made driving a taxi and the number of taxi medallions remained the same, he was able to charge drivers more for the privledge of driving a taxicab. He now has at least 1 million in cash flow per year.

He did not have to work 120 hours a week, develop an innovative product or inspire 100s of employees. He contracts out services and has few employees.

His source of income is the independent operators who lease his cabs.

While the way he built his wealth is similar to the process that landlords use to build wealth, he did not have to deal with the hassles of residential real estate. Imagine having to evict some loud music drug user!Since the cab drivers wanted to make money from customers they had every incentive to take care of the cabs they leased.

Additionally, since his niche is less well known and more specialized than residential real estate, his rate of return on each cab was higher.
My questions are:

Would any of you have any suggestions on how what he did could be done starting today: That is building wealth via an asset that is easily leased/rented, yet requires less hassle then residential real estate and with a greater return and then borrowing from the equity of the first purchase along with the cash flow to get a second and so on?

What are some good alternatives to residential real estate that could allow one to build wealth via a similar process?

 

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[The-J]

One problem: medallions are F*cking expensive. Hundreds of thousands of dollars. I'd rather buy a house.

Check my blog entry. Or, from a guy whose done it, go to foreverjobless.com and read the articles there. There's only 3 right now, but snowbank did them well.

 

[Z5 FILMS]

Medallions can cost as much as $1MM.

 

[Guest3722A]

Check it dawg-
Google NEMT
Less bs with a lower barrier AND paid out by insurance companies.

Honestly, I think this is an industry that's not cornered by anyone

 

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[Yankee427]

Check it dawg-
Google NEMT
Less bs with a lower barrier AND paid out by insurance companies.

Honestly, I think this is an industry that's not cornered by anyone

You lease out vehicles for this to the companies, or are you talking about starting your own NEMT company?

 

[Guest3722A]

Neither. For me, this type of business isn't appealing. However, in comparison to a cab company, quite a few people who read these threads can meet the barriers to entry. They're there, so not everyone.could do this. My point was that it was easier and less expensive to do than open a cab company. The bonus kicker is that your.customers are already there, every single day, provided by Dr appointments set weeks in advance that the insurance companies (or medicaid)have lists of. Basically once licensed and registered with the companies, just turn the computer on and make your list for the week.

This industry imo, although controlled to an extent, has several opportunities to work in from, not just being a driver company. You metioned leasing for this purpose and I'd say, sure why not.

Be creative

 

[DeletedUser2]

buy equipment, and lease.

Heavy equipment,
Cars
Bikes,
vending machines
mobile homes
Tools
medical equipment (oxygen tanks, wheel chairs)
office space (sub lease agreements or co-working space)
washers and dryers (rent to own)

the model is coppied a bunch of times all over the place.
its more about taking the cash you earn, putting it back into the business, (what ever business your in) and expanding the units you can rent
until you have a long term cashflow.

how many years did he take to get there?

your looking at the end product. almost like an event. but its a process of doing

He did not have to work 120 hours a week, develop an innovative product or inspire 100s of employees. He contracts out services and has few employees.

here is the end goal. but to get there Im sure he had to do crazy hours, scrimp, save, and reinvest money that could have gone to vacations, or toys, and build his business.

now he gets to enjoy it.

for you do to the same. pick 1 thing and get really really good at it. learn to tell when a deal comes along, learn to tell what you must focus on, learn to discern what are your bottle necks, and relentlessly focus on removing them.

you can make a million in a million different ways. the trick is to PICK one, and keep doing it.

I recenlty met with someone who bought little strip malls, and kept them, focused on paying them down. now he has 75M in real estate that is free and clear, paying him monthly. it took him just over 25 yrs. but they are all paid off now.

he only focused on 1 type, in 1 demographic. hyper focused real estate.

you just have to start someplace.

Good luck

Z

 

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[TrendSettersInc]

My mentor built his wealth off of transportation, He actually went to auction and pick up used impalas/crown victorias (police cars because of durability) had them painted w/ decals. He started from one car and a cell phone, permits and insurance. It now does around $800k a year and he has 40 vehicles for taxi, limo, party buses and one 54 passenger bus, His business does taxi, non-emergency medical and events. All vehicles bought from auction for very low prices, He owns all of them outright.

Some cities, states don't require a medallion so find out the laws, and maybe check into auctions to find great vehicles. I purchase vehicles from auction from time to time and I see some taxi services sell they're older fleet (usually 5-6 year old vehicles with 100-200k miles on them) for very good prices. Realize if you keep up with maintenance most of these vehicles can get 350,000 miles on them easily. Then putting them to work you can make your money back from buying them in a few weeks and make a very good amount per vehicle each month having a solid customer base.