What Do Owner Operators REALLY Make?
Summary
TLDRIn 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
🚚 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.
💰 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.
📈 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.
🛠 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.
Mindmap
Keywords
💡Owner Operator
💡Creed
💡Debt-Free
💡Mileage Bonus
💡Risk
💡Return on Investment (ROI)
💡Truck Payments
💡Passive Income
💡Emergency Fund
💡Net Taxable Income
💡Investment
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
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