Double Yellow's Company Driver to Independent Thread

Opportunity Cost: The cost of an alternative that must be forgone in order to pursue a certain action.



I updated my projections for my first full year running as an independent and I thought it would be a good time to compare it against what I could have done staying a company driver and either investing my money in real estate exactly like my current residential triplex or investing in the S&P 500 with a DRIP plan:


[TABLE]
[TR]
[TD]Trucking[/TD]
[TD][/TD]
[TD][/TD]
[TD]Triplex[/TD]
[TD="width: 86"][/TD]
[TD="width: 86"][/TD]
[TD="width: 238"]S&P 500[/TD]
[TD="width: 86"][/TD]
[/TR]
[TR]
[TD]
[/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[/TR]
[TR]
[TD]Revenue[/TD]
[TD]$180,000.00[/TD]
[TD][/TD]
[TD]Rents[/TD]
[TD]$21,235.00[/TD]
[TD][/TD]
[TD]Appreciation (w/ dividends reinvested)[/TD]
[TD]$7,779.15[/TD]
[/TR]
[TR]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD]Appreciation[/TD]
[TD]$10,000.00[/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[/TR]
[TR]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[/TR]
[TR]
[TD]Fuel[/TD]
[TD]-$45,000.00[/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD]Fees[/TD]
[TD]-$14.00[/TD]
[/TR]
[TR]
[TD]Maintenance/Repair[/TD]
[TD]-$25,000.00[/TD]
[TD][/TD]
[TD]Management[/TD]
[TD]-$2,123.50[/TD]
[TD][/TD]
[TD]Taxes (if buy & hold)[/TD]
[TD]0[/TD]
[/TR]
[TR]
[TD]Plates, permits, fees[/TD]
[TD]-$6,500.00[/TD]
[TD][/TD]
[TD]Utilities[/TD]
[TD]-$674.77[/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[/TR]
[TR]
[TD]Tolls, scales, parking, wash, misc[/TD]
[TD]-$1,800.00[/TD]
[TD][/TD]
[TD]Maintenance[/TD]
[TD]-$4,661.12[/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[/TR]
[TR]
[TD]Truck Insurance[/TD]
[TD]-$8,000.00[/TD]
[TD][/TD]
[TD]Repairs[/TD]
[TD]-$2,156.64[/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[/TR]
[TR]
[TD]Health Insurance[/TD]
[TD]-$2,220.00[/TD]
[TD][/TD]
[TD]Insurance[/TD]
[TD]-$1,056.00[/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[/TR]
[TR]
[TD]Office Expenses[/TD]
[TD]-$3,600.00[/TD]
[TD][/TD]
[TD]Taxes[/TD]
[TD]-$1,163.62[/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[/TR]
[TR]
[TD]Business Associations[/TD]
[TD]-$500.00[/TD]
[TD][/TD]
[TD]Mortgage[/TD]
[TD]-$7,813.32[/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[/TR]
[TR]
[TD]Truck supplies[/TD]
[TD]-$2,000.00[/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[/TR]
[TR]
[TD]Travel (motel, showers, laundry)[/TD]
[TD]-$4,500.00[/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[/TR]
[TR]
[TD]Taxes:[/TD]
[TD]-$6,000.00[/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[/TR]
[TR]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[/TR]
[TR]
[TD]Net:[/TD]
[TD]$74,880.00[/TD]
[TD][/TD]
[TD]Net:[/TD]
[TD]$11,586.03[/TD]
[TD][/TD]
[TD]Net:[/TD]
[TD]$7,765.15[/TD]
[/TR]
[TR]
[TD]Assets/Equity:[/TD]
[TD]$40,000.00[/TD]
[TD][/TD]
[TD]Assets/Equity:[/TD]
[TD]$57,782.74[/TD]
[TD][/TD]
[TD]Assets/Equity:[/TD]
[TD]$52,765.15[/TD]
[/TR]
[TR]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD]Cash Flow[/TD]
[TD]$1,586.03[/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[/TR]
[TR]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[/TR]
[TR]
[TD]Capital Contribution (cash)[/TD]
[TD]$45,000.00[/TD]
[TD][/TD]
[TD]Capital Contribution (cash)[/TD]
[TD]$45,000.00[/TD]
[TD][/TD]
[TD]Capital Contribution (cash)[/TD]
[TD]$45,000.00[/TD]
[/TR]
[TR]
[TD]Company driver net income[/TD]
[TD]$52,000.00[/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[/TR]
[TR]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[/TR]
[TR]
[TD]ROI (compared to company driver)[/TD]
[TD]39.73%[/TD]
[TD][/TD]
[TD]ROI[/TD]
[TD]54.15%[/TD]
[TD][/TD]
[TD]ROI[/TD]
[TD]17.26%[/TD]
[/TR]
[/TABLE]

*Note that my taxes are probably going to be much lower than typical due to maximizing retirement contributions, having OTR per diem, etc




So if I'm being results-oriented, clearly investing in real estate in 2014 would have been better than investing in a 1-man trucking company. But if I consider the decision and not the actual results, I would not expect $10,000 appreciation in the average year (nor would I expect a 17% return from the S&P). So trucking looks better if I compare against what I consider more normal returns (2.5% appreciation for multifamily residential units & 8% long-term S&P return):


[TABLE]
[TR]
[TD]Trucking[/TD]
[TD="width: 86"][/TD]
[TD="width: 86"][/TD]
[TD="width: 172"]Triplex[/TD]
[TD="width: 86"][/TD]
[TD="width: 86"][/TD]
[TD="width: 238"]S&P 500[/TD]
[TD="width: 86"][/TD]
[/TR]
[TR]
[TD]
[/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[/TR]
[TR]
[TD]Revenue[/TD]
[TD]$180,000.00[/TD]
[TD][/TD]
[TD]Rents[/TD]
[TD]$21,235.00[/TD]
[TD][/TD]
[TD]Appreciation (w/ dividends reinvested)[/TD]
[TD]$3,600.00[/TD]
[/TR]
[TR]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD]Appreciation[/TD]
[TD]$4,750.00[/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[/TR]
[TR]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[/TR]
[TR]
[TD]Fuel[/TD]
[TD]-$45,000.00[/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD]Fees[/TD]
[TD]-$14.00[/TD]
[/TR]
[TR]
[TD]Maintenance/Repair[/TD]
[TD]-$25,000.00[/TD]
[TD][/TD]
[TD]Management[/TD]
[TD]-$2,123.50[/TD]
[TD][/TD]
[TD]Taxes (if buy & hold)[/TD]
[TD]0[/TD]
[/TR]
[TR]
[TD]Plates, permits, fees[/TD]
[TD]-$6,500.00[/TD]
[TD][/TD]
[TD]Utilities[/TD]
[TD]-$674.77[/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[/TR]
[TR]
[TD]Tolls, scales, parking, wash, misc[/TD]
[TD]-$1,800.00[/TD]
[TD][/TD]
[TD]Maintenance[/TD]
[TD]-$4,661.12[/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[/TR]
[TR]
[TD]Truck Insurance[/TD]
[TD]-$8,000.00[/TD]
[TD][/TD]
[TD]Repairs[/TD]
[TD]-$2,156.64[/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[/TR]
[TR]
[TD]Health Insurance[/TD]
[TD]-$2,220.00[/TD]
[TD][/TD]
[TD]Insurance[/TD]
[TD]-$1,056.00[/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[/TR]
[TR]
[TD]Office Expenses[/TD]
[TD]-$3,600.00[/TD]
[TD][/TD]
[TD]Taxes[/TD]
[TD]-$1,163.62[/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[/TR]
[TR]
[TD]Business Associations[/TD]
[TD]-$500.00[/TD]
[TD][/TD]
[TD]Mortgage[/TD]
[TD]-$7,813.32[/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[/TR]
[TR]
[TD]Truck supplies[/TD]
[TD]-$2,000.00[/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[/TR]
[TR]
[TD]Travel (motel, showers, laundry)[/TD]
[TD]-$4,500.00[/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[/TR]
[TR]
[TD]Taxes:[/TD]
[TD]-$6,000.00[/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[/TR]
[TR]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[/TR]
[TR]
[TD]Net:[/TD]
[TD]$74,880.00[/TD]
[TD][/TD]
[TD]Net:[/TD]
[TD]$6,336.03[/TD]
[TD][/TD]
[TD]Net:[/TD]
[TD]$3,586.00[/TD]
[/TR]
[TR]
[TD]Assets/Equity:[/TD]
[TD]$40,000.00[/TD]
[TD][/TD]
[TD]Assets/Equity:[/TD]
[TD]$52,532.74[/TD]
[TD][/TD]
[TD]Assets/Equity:[/TD]
[TD]$48,586.00[/TD]
[/TR]
[TR]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD]Cash Flow[/TD]
[TD]$1,586.03[/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[/TR]
[TR]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[/TR]
[TR]
[TD]Capital Contribution (cash)[/TD]
[TD]$45,000.00[/TD]
[TD][/TD]
[TD]Capital Contribution (cash)[/TD]
[TD]$45,000.00[/TD]
[TD][/TD]
[TD]Capital Contribution (cash)[/TD]
[TD]$45,000.00[/TD]
[/TR]
[TR]
[TD]Company driver net income[/TD]
[TD]$52,000.00[/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[/TR]
[TR]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[TD][/TD]
[/TR]
[TR]
[TD]ROI (compared to company driver)[/TD]
[TD]39.73%[/TD]
[TD][/TD]
[TD]ROI[/TD]
[TD]30.82%[/TD]
[TD][/TD]
[TD]ROI[/TD]
[TD]7.97%[/TD]
[/TR]
[/TABLE]



Still, that 9% extra return carries with it a lot of extra risk so frankly I would recommend rental real estate for most company drivers. But if you don't mind the risk and want a bit more control of your daily life...


Couple quick words on rental real estate: If you're interested in pursuing this route, research research research! Properties I look for have been well maintained (or cheap enough to rehab), are in areas not likely to suffer a population exodus (within 300 miles of either coast, college towns, state capitals, etc), are priced at less than 100 times monthly gross rents, and have well-reviewed property management nearby.

 

Truck update: Had a local shop install the jake (pacbrake). They did a great job and the truck drove noticably better (was overdue for an overhead).

Unfortunately, the ecm was locked so it had to go to Detroit (where it currently sits in line waiting for them to get to it). But the shop will copy the files, send them to Detroit, Detroit will turn on the engine brake and send the file back for the shop to reflash my ecm.

Unfortunately, they have to include a mandatory emissions update which may cost me mpg. Guess that's what I get for trying to support local businesses instead of shipping it out to *****.

Call everyone. Seriously, plan on spending a week doing this. Aside from OOIDA, there is NASTC, Great West, Progressive, etc. But I had more luck with local agents -- go find a phone book and start calling. Expect them to take days to get back to you with a quote.

Does your leased company not provide insurance? I'm assuming you'll just need physical damage...

I just put in my full legal name e.g. John Henry Smith. I believe on another line it'll ask for dba e.g. Smith Trucking

 

Yep, In California -- this is the only shop in the Sacramento area that could do it. I told them I did not want the update, he said he understood and would be the same way, but that the update was mandatory (maybe because it is a 2000 model year engine?). And I get to pay $750 for the privilege too.

$1800 for parts
$300 labor
$750 turn on jake ecm settings
-----
$2850 to retrofit...


No economic justification for jakes, but it should keep my hair from greying a little while longer. Plus if I ever get a glider I can just move this engine into it. As for the reflash, if it makes a noticeable hit in mpg I can always seek out alternatives. But my mpg would have to drop from 8.7 to 8.3 to justify a separate $2000 tune & I honestly don't think it'll have that big of an effect.