Lessons to Learn: From Taxi Plates in the Uber world

I listened to an episode from NPR's Planet Money podcast this morning.

The episode is about a guy that owns a lot of NYC Taxi Medallions and their current value.

I saw some good parallels between property investing and this story.

My key takeaways are:
1. Watch the LVR
2. Structure of assets is very important

Would be interesting to see what people think.

Episode 643: The Taxi King

 

I guess taxi plates are more susceptible to disruptions like Uber but are there a comparable disruption for real estate? Besides, Uber's disruption is to the taxi industry and the plates are a bit of an innocent bystander.

 

I am not suggesting something similar will happen to real estate. Just that I find that the lessons are useful.

Plates soared in value - upto $1 mil each. This guy had about $1 billion worth and highly leveraged. So, there are lessons to be learnt in risk management I think.

 

Rezoning proposals, density, resumption of land but these are government policy driven changes.

 

Housing is unlikely to find a competitor that crashes the market but it's not immune to market forces and there are plenty of things that could cause a crash so it's worth learning the lesson presented even if it is far less likely.

 

Disruptive and collaborative enterprise/technology could affect us as property investors. If we don't proactively rent (well positioned housing with favourable amenity) room by room ourselves the tenants taking a head lease will ramp up the sub-letting that is going on now albeit in a small/moderate way currently. Uber driver themselves will be screaming in 10 years when "Johnny Cab" rocks up booked through an Uber app and the fully autonomous vehicle takes you wherever you need to go without any parking costs or problems or wage constraints or strikes or sick leave.

Back to housing.........expect it soon that RTA's will state that the tenant has the ability to sublet or airbnb the property they are leasing without consent from the landlord. Insurance matters will need to be addressed and catch up, however as the world is changing it would behoove all of us as landlords to understand the demand pressures room by room letting will bring forth. Larger accommodation stock to select from may find softening demand unless we adapt and become a little strategic in how we present our properties to maximise the upside ourselves.

 

the Uber/taxi scenario is most certainly not the first business to have a major shake up. ALL business models will get shaken around at some point.

A couple of hundred years ago, the carriage makers and saddle makers surely thought that automobiles would never take off, and that their businesses were safe because people had "always needed saddles and carriages"

Just in my relatively short 50-ish years I have seen changes. I grew up in my parents mixed business corner store. These type of shops died with the advent of supermarkets in the early 70's.

My own business was one hour Kodak photo stores. You all know what happened to them.

As a business owner you do need to be constant on the lookout for threats. I sold my photo stores before they were worth absolutely nothing.

From a property investment /AirBNB model, the opportunity is there to create a tourism business that provides AirBNB rooms and properties. Of course this is a vastly different model than a straight "rent to a family" deal. Yes it will take some time to sort out the bugs and the "authorities" (councils, insurance companies and property managers ) will struggle to keep up. ...but we live in a fast changing world.

 

There is no constant - except change.

 

Uber should be put against a wall. That's how Ifeel about them.

They operated illegally to begin with. Any small guy trying to do that would have copped it from the authorities.

But because Uber is big, rich abd influential they get away with it and those who obey the law suffer a loss .

I didn't listen to the whole podcast but I hope that fella with the cabs was smart enough not to lose all his money.

 

The only question to ask is,what business models will face the same outcome..

 

Personal loans/credit cards may be replaced with peer to peer lending.

http://www.canstar.com.au/p2p-lending/who-offers-peer-to-peer-lending-in-australia/

Microfinance is huge business is emerging economies and peer to peer lending will ( I think) gain a foot hold in established markets quite quickly.

 

I disagree with this as it is assuming all landlords are going down the room by room path. This is a niche in the market, yes air bnb has grown astronomically over last few years, but what incentive is there for the majority of landlords to sub lease? A little extra cash with a whole lot of risk management issues.....
This exists in the commercial world but I'm skeptical of it's applicability to the residential market.

 

Player was saying the tenant could potentially sublease without requiring permission, as opposed to the landlord. That's completely different and disruptive to the current model...

 

Wow I wonder what his lvr is?
A win for taxis after NYE lots of reports of ridiculous charges for uber customers... 250 for a 15min trip Perth to Willeton Nye

 

Boo hoo.
Get the f##k over iy

 

Uber over charging passengers on new years eve.... See reports. This wouldn't happen with taxis as the fares are regulated. Passengers are getting ripped off lol. Nice one Uber.

 

Transport or no transport, that is the question... nobody is forcing anybody to accept to take an overpriced trip. But you have to weigh up your alternatives.

Same with Hotels or Airbnb.... they can price according to demand. It's up to the consumer whether they want to accept the price or not.

 

It's price gouging. Unethical and exploitative. Not good. Maybe in some countries it's a norm but not here. They'll only get negative publicity.