What Do Owner Operators REALLY Make?

Summary

In this video, Tyler Freed shares his experience transitioning from a company driver to an owner-operator in the trucking industry. He discusses the financial considerations and benefits of being debt-free, emphasizing the importance of having an emergency fund and low operating costs. Tyler provides a candid analysis of the potential earnings and risks involved, advising viewers on how to determine if the investment in trucking is worth it, and advocating against taking on debt for such a venture.

Takeaways

• 🚚 The speaker, Tyler, is an owner-operator truck driver who recently switched from being a company driver and is currently operating in New Mexico.
• 💡 He is discussing the decision-making process behind becoming an owner-operator and how to determine if it's financially viable compared to being a company driver.
• 🔢 Tyler emphasizes the importance of analyzing personal finances and business expenses before making the switch to avoid high costs that can outweigh potential profits.
• 🏦 He shares his personal experience, mentioning that he had a high-paying job as a company driver at C.R. England, making over $100,000 a year, which influenced his decision to become an owner-operator.
• 🚛 Tyler explains that being debt-free and having an emergency fund are crucial for owner-operators to manage unexpected costs and maintain a low cost of operation.
• 💰 He illustrates the financial benefits of being an owner-operator by comparing his potential earnings to his previous income as a company driver, highlighting the potential for higher profits.
• 📈 Tyler uses a hypothetical scenario to calculate the return on investment (ROI) for becoming an owner-operator, suggesting that a 50% ROI is a good benchmark for considering the move.
• 📉 He warns against taking on too much debt to start a trucking business, as it can lead to financial strain and high risk, recommending a conservative approach to investment.
• 🤔 The speaker encourages viewers to consider the true profit of an owner-operator, which is the income above what they would make as a company driver, as the key indicator of the business's viability.
• 📊 Tyler suggests that a minimum ROI of 25% is necessary to justify the risks associated with owning and operating a truck, especially when considering the potential for unexpected expenses.
• 👍 The video concludes with Tyler's endorsement of the owner-operator lifestyle for those who can manage the risks and costs effectively, and his intention to create more content on this topic.

Q & A

Who is the speaker in the video and what channel is he representing?

The speaker is Tyler Freed, and he is representing The Living Freed Channel on YouTube.

What is Tyler's current location and where is he headed?

Tyler is currently in New Mexico, heading westbound on I-40 towards Albuquerque.

What is the purpose of Tyler's trip to Albuquerque?

Tyler has a delivery in Albuquerque and a pickup headed to California, which are the first two loads of his week.

Why does Tyler enjoy being an owner-operator for Creed?

Tyler enjoys the owner-operator side of Creed because he finds it very good and it's worth it for him after doing it for almost three full weeks.

What is the main topic of discussion in the video?

The main topic is determining whether it's worth it to switch from being a company driver to an owner-operator in the trucking industry.

What is the importance of analyzing the financial aspect before becoming an owner-operator?

Analyzing the financial aspect is crucial to understand the true profit potential and whether it's more beneficial than being a company driver, considering the higher expenses involved.

What was Tyler's annual income as a company driver at Creed?

Tyler made $105,000 as a company driver at Creed in the previous year.

What factors contributed to Tyler's decision to become an owner-operator?

Tyler decided to become an owner-operator after considering his high income as a company driver, being debt-free, having an emergency fund, and the potential to make more money with lower operating costs.

What is the significance of having no debt when starting as an owner-operator?

Having no debt allows for lower operating costs and less financial stress, which is beneficial for the business and personal peace of mind.

How does Tyler calculate the potential profit as an owner-operator?

Tyler calculates potential profit by comparing the income he could make as an owner-operator to what he made as a company driver, considering all fixed costs and expenses.

What is the minimum additional income Tyler believes is necessary to justify the risk of being an owner-operator?

Tyler believes that making at least a 25% return on investment, after paying himself a good wage, is necessary to justify the risk.

What advice does Tyler give regarding the use of debt to start an owner-operator business?

Tyler advises against using debt to start an owner-operator business, as it can set one up for failure due to high costs and financial stress.

How does Tyler view the comparison between investing in a truck and investing in an index fund?

Tyler views investing in a truck as riskier than investing in an index fund, but acknowledges that with sufficient capital and low operating costs, the trucking business can yield higher returns.

Outlines

00:00

🚚 Transition to Owner-Operator: Experiences and Considerations

In this paragraph, Tyler introduces himself and the topic of the video, which is about his transition from a company driver to an owner-operator. He discusses his current journey and the loads he is handling, setting the stage for a deeper dive into the financial and lifestyle aspects of being an owner-operator. He emphasizes the importance of understanding the true profit margins and the decision-making process involved in making the switch. Tyler also mentions his positive experience with Crete Carrier and his high earnings as a company driver, which sets a benchmark for his comparison between company driving and owning a truck.

05:01

💰 Financial Analysis of Becoming an Owner-Operator

Tyler delves into the financial aspects of being an owner-operator, comparing his previous earnings as a company driver with the potential income he could make as an owner-operator. He explains the importance of being debt-free and having an emergency fund when starting out as an owner-operator. He uses his own experience to illustrate the potential for increased earnings and discusses the factors that can affect profitability, such as truck payments, insurance, and maintenance costs. Tyler emphasizes that the true profit of an owner-operator is the amount they can make above a high-paid company driver's salary.

10:04

📈 Calculating Return on Investment for Trucking Business

In this paragraph, Tyler discusses the concept of return on investment (ROI) when considering becoming an owner-operator. He uses hypothetical numbers to illustrate how an investment in a truck and the associated business can yield a significant ROI, provided the owner-operator is debt-free and has a low cost of operation. He compares the potential ROI from trucking to other investments, such as index funds, and highlights the increased risk associated with owning a truck. Tyler stresses the importance of ensuring that the potential profit justifies the risks and efforts involved in running a trucking business.

15:05

🛠 The Importance of Capital and Risk Management in Trucking

Tyler concludes the video by emphasizing the importance of having sufficient capital and managing risk when considering a transition to an owner-operator. He advises against taking on debt to purchase a truck and warns of the potential pitfalls of not having enough cash to cover business expenses. Tyler suggests that those without the necessary capital might be better off continuing as company drivers and investing their savings in lower-risk assets. He also shares his perspective on the value of having an emergency fund and being debt-free, which provides a financial cushion against unexpected costs and allows for greater peace of mind.

Keywords

💡Owner Operator

An 'Owner Operator' in the trucking industry refers to a person who owns their own trucking business and operates it independently. In the video, the term is central to the discussion as the speaker, Tyler, shares his personal experience transitioning from a company driver to an owner operator and discusses the financial implications of this decision.

💡Creed

Creed is the name of the trucking company that Tyler, the speaker, is associated with. He mentions it as a place where he used to work as a company driver and where he earned a high rate per mile, which is significant in understanding his financial background before becoming an owner operator.

💡Debt-Free

Being 'debt-free' means not having any outstanding loans or financial obligations. In the context of the video, Tyler emphasizes the importance of being debt-free when transitioning to an owner operator, as it allows for lower operational costs and less financial stress, which is a key factor in his decision-making process.

💡Mileage Bonus

A 'mileage bonus' is an additional payment given to drivers for reaching a certain mileage threshold within a set period. Tyler mentions this as part of his compensation as a company driver, which contributed to his high earnings and is a factor he considers when evaluating the financial benefits of being an owner operator.

💡Risk

In the video, 'risk' is discussed in the context of financial and business decisions. Tyler talks about the higher risks associated with being an owner operator, such as truck payments and maintenance costs, and contrasts them with the lower risks of being a company driver with a stable income.

💡Return on Investment (ROI)

Return on Investment (ROI) is a financial metric used to evaluate the efficiency of an investment. Tyler uses the concept of ROI to determine whether the potential earnings from being an owner operator justify the risks and costs involved, comparing it to other investment opportunities.

💡Truck Payments

In the script, 'truck payments' refer to the regular installments made to repay a loan taken out to purchase a truck. Tyler discusses how having to make truck payments can significantly impact the profitability of an owner operator's business and influence his stance on debt-free business operations.

💡Passive Income

'Passive income' is income earned with little to no effort after an initial investment of money or time. Tyler contrasts the potential passive income from investing in index funds with the active income and higher risks associated with being an owner operator.

💡Emergency Fund

An 'emergency fund' is a reserve of cash set aside to cover unexpected expenses or financial emergencies. Tyler mentions having an emergency fund as a crucial part of his financial planning as an owner operator, providing a safety net against unforeseen costs.

💡Net Taxable Income

Net taxable income refers to the income remaining after all deductions have been made. In the video, Tyler uses his net taxable income as a basis for comparing his earnings as a company driver to his potential earnings as an owner operator, highlighting the financial benefits of his new role.

💡Investment

In the context of the video, 'investment' refers to the act of putting money into a venture with the expectation of generating a profit. Tyler discusses various types of investments, including buying a truck as an owner operator, and evaluates them based on their potential returns and associated risks.

Highlights

Tyler, the owner of the 'Living Free' channel, discusses his experience as an owner-operator in the trucking industry.

He is currently in New Mexico, heading westbound on I-40 to Albuquerque for a delivery and pickup to California.

Tyler emphasizes the importance of analyzing whether becoming an owner-operator is financially viable before making the switch.

He shares his personal journey and financial considerations that led him to become an owner-operator with Creed.

Tyler explains that being debt-free and having an emergency fund are crucial before starting as an owner-operator.

He details his previous earnings as a company driver and compares them to his potential earnings as an owner-operator.

Tyler discusses the financial benefits of not having a truck payment and the freedom it brings to an owner-operator.

He provides a hypothetical scenario to illustrate the potential earnings increase by becoming an owner-operator.

Tyler emphasizes that the true profit of an owner-operator is the amount made above a high-paid company driver's salary.

He explains the concept of return on investment and how it applies to the decision to become an owner-operator.

Tyler argues that a minimum of 25% return on investment is necessary to justify the risks of being an owner-operator.

He advises against taking on debt to become an owner-operator, as it can lead to financial strain and risk.

Tyler shares his perspective on the importance of having a low cost of operation as an owner-operator.

He discusses the potential for higher earnings as an owner-operator compared to a company driver.

Tyler highlights the importance of having a clear financial plan and emergency fund before making the leap.

He concludes by sharing his insights on the trucking business and the factors to consider when deciding to become an owner-operator.

Transcripts

what is going on YouTube Welcome to The

Living freed Channel my name is Tyler

freed and in this video I am in New

Mexico right now I'm headed westbound on

I40 headed into Albuquerque New Mexico I

deliver there tomorrow morning uh I've

got a drop there and then I actually

have a pickup out of Albuquerque headed

over to California so these two loads

are starting out my week and so it's

should be a very good week with these

first two loads kicking off my pay

period and uh for those of you that do

follow me man I'm really enjoying

driving for creed I'm really enjoying

the owner operator side of creed it's

very good uh and I'm enjoying it so far

I've been doing it now for almost three

full weeks and it is definitely worth it

for me 100% And you have seen the title

I am going to be talking about how to

know what an own owner operator truly

makes and how to determine whether it's

worth it to switch from being an owner

operator to company driver I'm going to

kind of explain in this video how I

determined whether it was worth it or

not uh before I decided to make the leap

to become an owner operator now I'm

going to use very basic numbers and I am

going off of the top of my head so bear

with me you will get the idea though

you'll get the gist of it by just

listening to the entire video so who is

this video for for those of you that are

new it is for people who are not

familiar with the trucking business

they're new to trucking but they aspire

to be owner operators one day I do

believe that this video is perfect for

you because a lot of guys do not analyze

they do not do their due diligence

before going out and buying or leasing a

truck and they don't really understand

what they're truly profiting or whether

they're even profiting at all right

because it is very true that in a lot of

cases a higher paid company driver will

actually make more money with less risk

than an owner operator in a lot of cases

and why is that very simply put is

because that owner operator H has way

too high of expenses and I'm going to

get into that in this video so I

appreciate all of you for being here

make sure you like the video it helps

out with YouTube YouTube algorithm if

you do that and if you're not subscribed

Please Subscribe don't worry I'll get

right into the topic and I'm going to

try to make it as short suweet into the

point as possible thank you for being

here so let me get right into it how did

I determine whether or not trucking or

being an owner operator was worth it to

me was it I and I had a very good

position at Creed I had a very high rate

per mile I did at Creek when I was a

company driver I was making a very good

rate I was definitely making $100,000 a

year at Creek last year on my 1099 I

made

$105,000 or not 1099 my W2 I made

$105,000 for the year as a company

driver and that is with taking vacation

time and everything I was making very

good money and why am I even saying that

because in a lot of cases a lot of guys

would tell me man I wouldn't make the

switch I wouldn't become an owner

operator there's no way I would do that

with the type of money you're making

with zero risk now they were very right

they were very right had I not had the

money to go out and pay cash for this

truck had I not had the money to not

only pay cash but to have a emergency

fund a foundation laid for the business

and that is what I plan to do before I

ever became an owner operator I said

look I'll become one but I'm not going

to take out debt to become one and it's

more than just having a loan it's not

having a loan that's the major reason

why I didn't want to have a truck

payment if I were going to be an owner

operator it's because when you have a

truck payment it really cuts into your

costs it also sort of makes you a slave

to the truck I wanted to be an owner

operator and have a low cost of

operation and also not have to stress

about making a truck payment when I was

home who wants to do that you know if I

can make 100 Grand a year and not have a

truck payment not have truck insurance

not have to worry about maintaining the

truck because the company does that you

know I just didn't want all of these

high costs if I was going to be an owner

operate so I took my time I drove

company for about 5 years now it wasn't

all with cre carrier for the first 3

years I drove for Millis transfer uh a

little bit smaller company than cre and

then I switched to cre about two years

ago coming up in July it'll be my 2-year

anniversary with GRE and um a year and a

half of that well over a year and a half

that most of that was company and I was

making very very good money because now

you you may be saying well I'm looking

at the rates at Creet and they pay

between 60 and 63 cents per mile at

Creet if you're starting out OTR that is

true right now if you're doing all 48

you make between 60 and 63 well when I

first came here it was during the boom

time it was during the covid boom time

and Trucking and the actual cap on OTR

was up to 70 cents per mile and I

already had pretty much almost 4 years

of experience so I got a very good rate

plus they give you uh 4 cents per mile

for a mileage bonus as long as you hit

30,000 miles in a quarter you will hit

the mileage bonus and they'll pay you 4

cents on top of your base rate and um so

altogether I was making a little over 70

cents a mile as a company driver and I

don't mind sharing it now cuz I'm not a

company driver but to put it in

perspective I was making very good money

easily could make two grand a week as a

company driver well so why would you go

and buy a truck well being out of debt

and running the number

um based on the rates that cre pays and

the fuel surcharge and the fuel

discounts and all of that based on the

numbers I saw that I could make an extra

an extra bare minimum too in some weeks

I'll make a lot more than this but bare

minimum another th000 week for running

the same amount of miles so let's say I

could make a 100,000 a year as a company

driver for creed but if I go and by buy

a truck cash I can make 150,000 in a

year and that's very doable that is

after fuel that is after all my fixed

costs and everything I can do that now

if I had a $20,000 truck loan every year

to service we'll take 20 off of that or

whatever now when I say 150 you could

actually do more net you could if you

just stay out here all the time and

don't stop running at all you could do

better than that but I'm doing a very

you know very conservative average on

what you can make if you were to stay

out and you maintained your truck

correctly and you run you run as hard as

you were as a company driver you keep

doing that as an owner operator CU a big

problem too with owner Ops there's a lot

of them they switch from company to

owner op and it's a lot easier to make a

really good check you can run way less

Ms like you could make you know two

grand a week running especially if

you're out of debt you could make two

grand in a week and only do 2,000 miles

you know you can make a little over two

grand and not have to run that hard some

guys actually become owner Ops so they

don't have to run as hard anymore and

I'm not knocking you for doing that if

that's what you want to do but the moral

of the story is I'm trying to make a

point um about whether it's worth it to

be an owner operator and how to

determine that well okay let's say you

know I'm making

150 T net tax ible income obviously you

got to pay taxes but everybody's tax

Situation's different so I'm going off

of you know net taxable income my

taxable income was 105 last year at C

that was on my W2

and I could potentially make between 150

and 175 as an owner off so let's say I'm

making 50,000 more than I would as a

company driver that's the true profit

right that is your true profit not 150

no the true profit of an owner operator

is what they would make above a high

paid company job what what you make

above what you were making as a company

driver that is your true profit now how

do you determine whether the rate of

return or the investment is worth it

well just remember that 50,000 above

what I could make as a company driver

let's say I have to put I I'll do a flat

number you don't have to put this much

into the business to start it but let's

just do

$100,000 you're buying a truck plus you

have an emergency fund and you got to

get all the the uh the parts and

equipment that you need you know

different stuff right to set your truck

up correctly let's say you need $100,000

right you invest 100,000 into your

business to get everything started and

you're going to make an extra $50,000 a

year right well that

$100,000 investment is making you a 50%

rate of return right so in this scenario

I would say that this investment is

worth it I'm not making $150 on

$100,000 investment no I am making

$50,000 on a $100,000

investment it could be lower than that

like I said I this is off the top of my

head I'm using round numbers to make the

point well if I can make 50% on my money

on that 100,000 I got to ask myself

where could I make a 50% rate of

return other than Trucking where could I

make that

now understand by buying a truck and

becoming an owner operator or growing a

fleet it's a lot riskier than other

Investments I would consider owning a

truck definitely a lot

riskier than owning an index fund owning

an S&P 500 Index I would 100% right but

the return the higher risk equals higher

reward so yeah I'm making 50% on my

money but I should make that because I'm

taking a lot more Risk by investing in a

small startup company that is what I'm

doing right versus just buying the S&P

500 where you can make 10 to 12% in the

S&P 500 without taking on all of the

risk and all of the headaches associated

with owning a business it could be a

trucking business it could be any

business I would look at any individual

business like this same as like real

estate owning physical real estate I

would look at real estate like this if I

can't at least make I would say about

25% on my money after I pay myself a

very good wage it is not worth the

investment because the risk is too high

and the margins just aren't there

they're not and so that's what I look at

can you make at least 25 and 25 is the

floor 25 is the floor because think

about it if you own a truck and you're

making2 5% on your money but for that

year so say you're making a 100 at your

company job but you can make an extra 25

because you've got truck payments and

stuff like that your expenses are a

little bit higher well guess what is

that 25% really worth it you may be

saying well yeah that's an extra 25%

well what if you have a $10,000 truck

repair that you have to

make now you drop that 25% return down

to 15% for the year you see where the

margin shrinks and you know you're

owning a truck you're going to have

repairs you're going to have maintenance

you're going to have that now you do

factor in putting money aside for

maintenance and all of that but

sometimes you have even bigger repairs

that you got to dip into savings to

cover well if I can make an extra 50

versus an extra I don't know 25 because

I don't have a $2,000 a month in truck

payments that gives me a lot more margin

for those breakdowns if I have a turbo

go out I can cover that yeah it Aid into

my profit but I'm still well above my

target return the return I would like to

make by taking on this much risk right

or that much risk these are the things

that run through my mind whenever I

think about an investment again I don't

care whether it's a truck or a piece of

real estate or a lawn service whatever

I'm not going to take

$100,000 and invest in a business that's

going to make me 15% a year with all the

added risk and you have to work for that

money see because if I buy an index fund

I don't have to work I just invest that

money and make dividends I don't work at

those companies those companies are

those people that work at those

companies that I own they're working for

me that is truly passive income that I'm

making there is it's a lot lower risk

than investing in a small startup 100%

it is and those of you that don't

understand the stock market I get it you

may be thinking oh you're crazy a

truck's better than owning a truck is

better than owning an index line well in

some cases it is yes if you have the

money to invest in a trucking business

and keep your costs really low yeah it

is worth it but if you have to use a lot

of debt to get started and you don't

have a lot of cash cash to cover your

expenses if you don't have a low cost of

operation and the capital that is

necessary to run a trucking business no

matter what size it could be one truck a

thousand trucks doesn't matter you have

to be loaded with cash to cover those

expenses and if you don't have that

situation why put your money into a

higher risk investment when you don't

have to when you could just drive

company make you know 80 to 100,000 a

year and stack 30 40 50% of your income

and then maybe in a few years you'll

have the cash to buy a truck and keep

your cost down like I'm talking about

it's very important I have not been

doing this very long at all I have not

but I already can see that if I had a

truck payment it wouldn't be as worth it

as it is being debt free and also having

that emergency fund that emergency fund

is a peace of mind because on this truck

that I own I don't even need my

emergency fund for a while I really

don't need it because I do have a

250,000 M warranty on this truck I do

have that however you still want to have

that cash it's very important to have

that 100% and again why no debt I keep

reiterating this because I do believe

there's a lot of bad advice out there

like oh go lease purchase a truck go

lease a truck oh go get a truck payment

no I disagree with that you're setting

yourself up for failure you really are

you're setting yourself up for failure

and why do that when there's a lot of

really good company jobs out there where

you can make a lot of money with low

risk and take your small amount of money

that you're able to save from your job

and go invest it elsewhere go invest it

in lower risk assets and then eventually

you can cash out some of that and go buy

a truck and become an operator and

really make a lot more money see because

I did say Hey you can make about $1,000

extra a week about 50,000 a year extra

that's the floor that's the floor you

could actually make more than that if

you get out here and you run hard and

you run just as hard as you were running

as a company guy you could do even

better than that you could like I said

earlier in the video but the point of

this video is to

explain how

to see whether an investment into

Trucking is worth it if you do not have

high margin starting out it is not worth

taking on the risk that is my opinion if

you disagree with that I don't really

care because it's my opinion um but if

you like the video please sub to the

channel like the video stay tuned for

more videos like this in the future I'm

going to be doing a lot more owner off

content since that is what I'm doing now

so I really appreciate each and every

one of you guys for being here God bless

and peace out