NYC Taxi Medallions and Investment
NYC taxi medallions are a transferable right granted by the city to pick up passengers without any prior arrangement. However, through effective regulation, the dollar value of this right may be heading toward a million dollars.
A commonly asked question is why the number of NYC taxi cab medallions increased? There are a limited number available and this number was constant at 11,787 for more than sixty years. So why has the number of taxicab medallions increased?
About ten years ago, Mayor Giuliani approved the New York City TLC to have three auctions selling four hundred medallions. The sales generated over $100,000,000 for the city. After a few years, another proposal for more new auctions was approved by Mayor Bloomberg.
These sales created more than a 1,000 new medallions and as of the beginning of 2009, the total number stands at just over 13,200. As of early 2009, if you wish to buy a NYC taxi medallion, get ready to pay about $600,000 for the individual and almost $750,000 for the corporate medallion. The industry has seen the value increase by almost 500% since the year 2000.
Some feel that the high price is an economic entry barrier to buy a NYC taxi medallion. While this may be true, it should be remembered that the price is the valuation given by an open market bidding process.
The three types are the individual, the corporate or fleet and the handicap access medallion.
The individual medallion currently requires the owner to operate the yellow taxicab at least 210 nine hour shifts per year. It is not unusual for two taxicab drivers to form a partnership or for an individual owner to lease out the vehicle for the shifts he or she is not working.
The corporate or fleet medallion does not need to be operated by the owner. In fact, the owner need not have a NYC yellow cab operators license at all. The fleet medallion can be leased on a shift basis, two shifts per day and for as much as $140 per twelve hour rental.
There are agents who manage and lease taxicabs and medallions to independent drivers under daily, weekly and even longer term arrangements for investors. As an investment, the most interesting aspect of NYC taxi medallions is the valuation trend. In 2009, as the US and world economies are shrinking, its value keeps rising.
To buy an individual NYC taxi medallion, a driver must have a New York City taxicab operators license known as a hack license. To obtain this hack license, one must complete mandatory training as provided by the Master Cabbie Taxi Academy in Queens, New York.
Weekly surveys of New York City taxicab driver income by Academy Director Terry Gelber indicate earnings of about one thousand dollars per week for the full time night shift driver and slightly less than one thousand for day shift drivers. Drivers who own their own car and lease the medallion tend to earn between one thousand and fifteen hundred dollars per week as do drivers who own both the car and medallion.
Is driving a yellow cab in the city interesting work? I can answer a resounding YES! One of the most interesting aspects of this profession is that you never know who your next fare will be. A Wall Street investment banker, an aspiring actor, a doctor, a tourist from afar, a doorman, a model, someone you instantly recognize — you just never know who is getting in next.
Are the hours long? Again, the answer is yes. After driving professionally for 60 to 90 days, a yellow cab driver in the city will be reasonably comfortable with the way to navigate for most of the trips. That being said, a driver will continue to learn the city even after years of driving.
Should you buy one of the New York City taxi medallions? Besides the interesting people as well as the steady income, there is the possibility of upward appreciation in the medallion value in the coming years. So if having one of the NYC taxi medallions interests you, investigate what you need to do to obtain it.
