How does a Taxi as an investment?

[Tiburonzzz]

Hi, probably mentioned already in the forums but wondering how well can you do investing in taxis in Sydney? don't know anything about it, but heard people can do really well with it, evn some people changing from real estate to taxis, keen to hear your thoughts

Cheers

Tz

 

[Simon]

A taxi license is an asset that can be bought and sold and leased.

It is not real property. It is not land.

In fact it is simply a registration paper and a number plate. Because of a controlled scarcity they have become valuable.

The biggest threat to them is deregulation of the industry. When other industries deregulated from high levels of protection then govt gave some compensation. Think commercial fishing, egg and milk production etc. Current taxi plate owners will tell you that if the industry deregulates you will get paid out by the government - but I think thats a lot to be crossing your fingures over.

Had you bought a taxi plate in a major city some time ago then history would say you have done well. Will they still be worth as much in the future if the industry deregulates? ie if Sydney decided to double the amount of taxi licenses to allow more competition?

Get comfortable with this issue before deciding to buy one.

 

[The Y-man]

I understand it is quite capital intensive.....

Cheers,

The Y-man

 

[Aaron Sice]

the plates alone in WA were $180k lst time i asked about it - no, not a misprint - $180k.

 

[Rob Williams]

Don't talk to me about taxi plates!! One of my many "investments I should have made" stories ..
Many years ago, an owner driver offered me his taxi and his plate for $5,000. The car was getting a bit tired, so I let it go.
Soon after that, they introduced random breath testing. Taxi plates doubled in value, literally, overnight. Then they opened the casino. They doubled again, overnight.
20/20 hindsight is a wonderful thing

 

[Simon]

The business is easy and similar to commercial property in some aspects.

You buy a plate for anything from $20K in a country town to much higher in larger cities.

Here is one from google right now.

TAXI PLATE Canberra $300,000. Return $1650 PM + GST.

So you buy it then lease it via a legally binding lease to a taxi company or sole operator. They then attach it to a car and run that car 24 hours to make what they can from it.

Don't ever confuse the plate with the actual Taxi Car. In some cases the car is worth hardly anything. It is the plate that is the assset.

This example above is returning 6.6% with no other outgoings and no work except to renew lease every year or so and recieve rent.

As the industry rental rates increase so will the value of the plate.

Is pretty straightforward and seems so much simpler than realestate.


Except for the spectre of deregulation

 

[HiEquity]

This example above is returning 6.6% with no other outgoings and no work except to renew lease every year or so and recieve rent.

Wow that's about what I can get today (net) with resi real estate around here... there must be a taxi plate ponzi scheme going on - all the specufestors causing a taxi plate price bubble! Run for the exits!!!

 

[Dazz]

the plates alone in WA were $180k last time i asked about it - no, not a misprint - $180k.

I looked at investing in taxi plates about 8 or 9 years ago here in Perth, they were about 170K at the time. Thank the Lord I ignored the deal and bought RE instead.

When Alannah finishes with that group, the plates will be worth about 25K.

 

[LearningMan]

My father in law just purchased one in Sydney. $340K. Took him 12mths to find one and then many sleepless nights ensuring he uncovered all the "mysteries" surrounding this industry.

It's a Prestige service (nice Fairmont Ghia car). He is semi-retired and drives it himself only. He has already built up a good client base who are happy to tip at company's expense

The industry is run by a bunch of cowboys so be warned.