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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?
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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