I Want to Start an LLC and Buy a New Truck, but...

As an owner operator that does most of my own mechanic work here's my advice. Donate your excess funds to a local charity and call it a day. In the end you'll be in the same place financially and you'll feel better about yourself.

 

Another thing is, you might find yourself spending months to get a team on board. Team drivers got military explosives to haul, ltl carriers like FedEx, old dominion and etc. full Benefits and attractive pay

 

Cap rate?

This isn't real estate.

It is roc or in some cases roi.

So let me interject some reality into all of this.

When you buy a truck and put a driver into it, you have to have liquid capital reserves.

One is for the wages of the driver.

One is for the repairs of the truck.

One is for the maintenance of the truck.

So what is your idea of paying your driver?

I hope it isn't mileage.

I pay 40% against the gross to the truck on every load as a base or foundation. They usually end up with more.

This means if the load is $1000, the driver is getting $400 for the work. Mind you I don't see $1000 that they pick much at all (that's another thing about being an owner but I won't get into it) and those are usually loads that take up less than a couple hours to complete - I have one driver who does these types of loads all the time and makes good money doing it.

BUT I digress ...

So let's say your driver's settlements are in the tune of $2500 a week, and some weeks it can be as high as $4500 on average. YOU have to have three weeks reserve for the max settlement to pay out for EACH driver in your fleet. YOU can not tell them "well I didn't get paid this week so you'll have to wait, it won't fly with good drivers. So that would be ~$13,500 in the bank for the drivers.

Then you have maintenance, which my average reserve is sitting at $6500 per truck, this covers oil changes, tires, and other routine maintenance. It also covers DPF cleaning and any other things I need like OAs.

Then you have repairs, I have $25k for each truck in reserve. I am not messing around with this, when there is a serious problem, I will pull the truck out of the fleet and put it into a repair status and replace it with another. BUT the costs for say a blown piston or something major seems to add up to about $25k on average.

This by the way doesn't include downtime or lack of revenue, with two trucks you can't afford a truck being down for long so you need accounts payable reserves, which is usually a few months of operating costs for the business (you have to keep paying insurance and other bills) so that can be as high as $30k alone.

So the 8% return you see has a big picture behind it, if I didn't keep reserves, you can run the numbers to see how much more I can pocket at the end of the day but I would not be in business without them.

So your $140k will just cover the truck, you will need a lot more than that to operate.

Your insurance will be at least $25k alone per truck.

I won't touch on hiring or what the differences are with 1099 vs employee status, that's too much involved.

 

No offense.

But this is exactly why you should not do this. If that's how you approach this you will be under before you start because you absolutely do not understand what you are looking at and that will put you under faster than anything. No one in an internet Forum can explain to you all of the things that you need to know because they are so many that you need to just have experience. You literally will take your money and light it on fire.

Please take our advice. Either go drive somewhere for a few years and learned the industry the business the lanes the freight the expenses the problems, or take your money and go to the casino and roll the dice in craps. You will have a much better shot at making money.

Believe me. If you have $200,000 saved it will be gone in a Flash because you have absolutely no idea the way this works.

You would do much better finding an established business somewhere, like say a beer distributorship or something like that a restaurant whatever and buy into that. Better yet go by real estate real estate always goes well it's a great investment keep doing what you're doing.

 

I suggest Subway shops if people have money, it is much easier to deal with, they hold your hand while you are learning and you can make money by expanding.

 

That's the equivalent of a teenage boy saying I know everything about women. It's just about kissing and holding hands.

It"s quite a bit more involved than that.

 

Become a member of www.OOIDA.com which is a business website for the owner-operator & small fleet owner.

 

How can those rates seem amazing when you have no clue on the cost of operating a truck?