If you pay $750k for it, it'll pay for itself in 10 years and after that it'll print money. In 20 years, you would make $750k.
You can still go bust if you pay more than it makes sense for the above math, but as long as medallion brings $75k/year of essentially no-work-required profit, it'll always be worth some multiply of that value.
The only thing that can bring this system down is:
a) government lifting the artificial limit on supply of medallions (in which case a driver can just get one from the government instead of leasing it from medallion owner)
b) all taxi drivers becoming Uber drivers (if Uber can give them better deal than a medallion owner, then why wouldn't they switch?)
If you pay off a house, all the rent money you collect after that is profit. If you pay off a medallion, all the rent money you collect after is profit. They are exactly the same.
When the banks started finding themselves the new owner of thousands of vacant real estate properties, they failed to manage them because they're a bank not a property management company.
The same thing could happen with medallions. When the banks start finding themselves owning thousands of medallions what makes you think they'll suddenly be interested in running a taxi company? They won't. They'll just let the medallions rot like they did the houses. When a medallion goes unmanaged the taxi it belongs to rots in the garage or gets liquidated. The drivers will go find other work or collect unemployment. There will be fewer taxis on the street. Pretty simple logic.
Maybe. But medallions are a lot easier to manage. They are immune to damage. As far as I know it should be possible to rent them out at a below-market rate with no skill, no risk, and little time invested.
They will, of course. It's highly unlikely that a bank that took possession of a medallion in a foreclosure would let it sit idle (and TFA says as much).
Think about that statement for a minute. What else has increased in value because of record-low interest rates? Houses come to mind.
What is going to happen when interest rates rise again (historical average is almost double that of current rates)?