Thoughts on a business that involves renting out physical products?

Guest24480 · Aug 16, 2014

I understand that rental systems are at the top of the list for passive income entrepreneurship (read this in TMF ), but does this include rentals of physical products? Or would that fall in a different category like distribution systems?

Also, if I were to approach something like this, how would I ensure that the products I am renting out are delivered back to me? What kind of pricing approach should I take (i.e. 5% of actual price of the product, 10%, 15%, etc.) to ensure that the value that the customer is receiving is higher than the price? Does this typically only work in a local setting? Maybe I'm looking too far ahead but I'm curious..

What are some good examples of successful businesses based on this model? First one that comes to mind would be movie rentals through the mail which is obviously a dying model, but I can't really think of many other examples.

I feel like it has to be a certain type of product for this to work (obviously nothing consumable or easily damaged). It would need to be something relatively expensive and out of a consumer's price range for them to want to rent it.

So maybe this isn't the greatest idea with a lack of capital, but I'd be interested in hearing other people's opinions this type of model because I may be missing something in my thought process.

Thanks in advance.

The-J · Aug 16, 2014

Read a little bit about Rent a Center, as well as farm equipment rental companies

Guest24480 · Aug 16, 2014

Cool thanks. I'm not sure if I could compete with rent-a-center unless I niched down or provided some kind of extra incentive or value to customers.

brandonrush · Aug 16, 2014

Oilfield rental equipment.

Movie Industry equipment rental.

Construction equipment rental.

Wedding/party supply rental.

There are a ton of verticals in the rental category and they all have the possibility of being lucrative.

MoneyDoc · Aug 16, 2014

I'm in the prefab/shipping container rental business! Lots of possibilities with these.

Guest24480 · Aug 16, 2014

MoneyDoc said:
I'm in the prefab/shipping container rental business! Lots of possibilities with these.

Have you generated profit doing this? I'm guessing start-up costs are relatively high. Also it doesn't seem like there'd be a huge target market to work with.

MoneyDoc · Aug 16, 2014

holmzee said:
Have you generated profit doing this? I'm guessing start-up costs are relatively high. Also it doesn't seem like there'd be a huge target market to work with.

It's pure profits right now.

Cost for me was: 5x shipping containers ($3k each); so = about $20k with everything paid for and delivered.

I rent them out to construction companies: $500-600 a month (2500-3000 a month). I currently deal with 1 company who's renting 5 from me a month. So I already made back my money + profits in year 1, now it's all pure profit (I'm 20, it's a nice little passive income while I'm in university).

I'm looking for ways to scale, to get more construction companies, aiming for 10-30k a month (so need about 20 containers out, which doesn't seem like a lot...). If you find customers and you can scale, you can make amazing profits. Most people in my area (Toronto) sell the containers... I couldn't find a lot that rented. So I decided to hit that market. Construction companies would rather rent since they're mostly seasonal, so why carry the extra inventory when its just sitting there when you can just rent.

AndrewNC · Aug 16, 2014

Vehicle Leasing - Secured by contracts where you can have a collections agency go after them if they don't return it.

Guest24480 · Aug 16, 2014

MoneyDoc said:
It's pure profits right now.

Cost for me was: 5x shipping containers ($3k each); so = about $20k with everything paid for and delivered.

I rent them out to construction companies: $500-600 a month (2500-3000 a month). I currently deal with 1 company who's renting 5 from me a month. So I already made back my money + profits in year 1, now it's all pure profit (I'm 20, it's a nice little passive income while I'm in university).

I'm looking for ways to scale, to get more construction companies, aiming for 10-30k a month (so need about 20 containers out, which doesn't seem like a lot...). If you find customers and you can scale, you can make amazing profits. Most people in my area (Toronto) sell the containers... I couldn't find a lot that rented. So I decided to hit that market. Construction companies would rather rent since they're mostly seasonal, so why carry the extra inventory when its just sitting there when you can just rent.

Very interesting. I never thought of it on a larger scale like that. I was thinking more along the lines of smaller-scale items and smaller profit/unit, but doing it your way makes it easy because you don't have to deal with too many customers. Are you ever worried about putting all your eggs in one basket? If that one company tanks then you have 0 customers. Then again you already have it paid off so it's not really a problem at this point, but was that an initial concern when you first started?

AndrewNC said:
Vehicle Leasing - Secured by contracts where you can have a collections agency go after them if they don't return it.

I wasn't aware that vehicle leasing could be done on an independent basis. Something to look into for sure

MoneyDoc · Aug 16, 2014

holmzee said:
Very interesting. I never thought of it on a larger scale like that. I was thinking more along the lines of smaller-scale items and smaller profit/unit, but doing it your way makes it easy because you don't have to deal with too many customers. Are you ever worried about putting all your eggs in one basket? If that one company tanks then you have 0 customers. Then again you already have it paid off so it's not really a problem at this point, but was that an initial concern when you first started?

It was bro, during the first year, I tried hard looking for other clients as well, but when they said they wanted 5 and agreed to the rent instantly I knew they were long term. Luckily now I'll just be left with inventory if they tank me. 2 options there: 1) rent to other companies 2) just sell the containers if I don't want to do it anymore.

But it's a really stress-free model, so I'm trying to scale now. I have an excellent manufacturer in china.

My goal is 10-30k a month from this side business.

MarkNNelson · Aug 17, 2014

MoneyDoc said:
But it's a really stress-free model, so I'm trying to scale now. I have an excellent manufacturer in china.

Are we talking about standard 40-foot containers? Looks like they're available throughout the US in as-is condition for $1500-$3000. What made you choose to import them from China?

MoneyDoc · Aug 17, 2014

MarkNNelson said:
Are we talking about standard 40-foot containers? Looks like they're available throughout the US in as-is condition for $1500-$3000. What made you choose to import them from China?

I'm talking about pre-fabricated ones. Like a mini-trailer home. Kitchen and washroom included. Excellent for construction workers.

TaylorB · Aug 17, 2014

Lots of rental ops. Tools, Airplanes, Cars, Boats.. you name it there are people who will rent it.

teabag · Aug 17, 2014

Portaloos for construction sites? Events and festivals?

I know one company in Sydney Australia that rents each Portaloo for $200 for friday pick up and monday drop off.

Then you can have 3-4 months hires for construction sites. This would include fortnightly cleaning and service though.

You can rent anything.

MJ DeMarco · Aug 17, 2014

holmzee said:
So maybe this isn't the greatest idea with a lack of capital, but I'd be interested in hearing other people's opinions this type of model because I may be missing something in my thought process.

Love this type of business. As for the logistics, every business will be different. The first step here would be to reverse engineer a similar, esetalbished business and mimic, or improve what they do.

holmzee said:
I feel like it has to be a certain type of product for this to work (obviously nothing consumable or easily damaged). It would need to be something relatively expensive and out of a consumer's price range for them to want to rent it.

Fear easy... easy, is well, too easy. When something is hard, then there is a problem to be solved. And wantrepreneurs don't want to solve problems and have things be hard, they want easy.

Guest24480 · Aug 17, 2014

MJ DeMarco said:
Love this type of business. As for the logistics, every business will be different. The first step here would be to reverse engineer a similar, esetalbished business and mimic, or improve what they do.

Fear easy... easy, is well, too easy. When something is hard, then there is a problem to be solved. And wantrepreneurs don't want to solve problems and have things be hard, they want easy.

Thanks MJ, you really sparked something creative in my brain. I began to look at other rental companies and an idea popped into my head when I looked into their model a little deeper. Although the idea was taken and established, I reversed the idea and thought of an even better one.

I'm going to begin some market research to see if the demand is there. It's a very large and expandable niche as well, so it won't be easy but I'm up for the challenge. Wish me luck!

Guest24480 · Aug 17, 2014

MoneyDoc said:
I'm talking about pre-fabricated ones. Like a mini-trailer home. Kitchen and washroom included. Excellent for construction workers.

Also, how did you initially store them? I'm not going into the prefab business but I have another sizeable item in mind for renting and I live in an apartment so I have no idea where to keep them. Storage facility?

jon.a · Aug 17, 2014

holmzee said:
Also, how did you initially store them? I'm not going into the prefab business but I have another sizeable item in mind for renting and I live in an apartment so I have no idea where to keep them. Storage facility?

RV lot?

TaylorB · Aug 17, 2014

An idea would be to buy a cheap truck that can move them for 5K or you can find someone to move them for you.

Then contact some farm owners or people with tons of property outside of town... Ideally you'd want to move them from one rental and have the next one lined up right away.

MoneyDoc · Aug 17, 2014

jon.a said:
RV lot?

I talked with the owner of an empty parking lot. He was kind enough to let me use his space for a very small fee per month.

Juhill · Aug 17, 2014

brandonrush said:
Oilfield rental equipment.

Wow. Just thinking about how big that could be out here in the Bakken. There goes my night of sleep...

TaylorB · Aug 18, 2014

A friend of mine bought some sort of oil head motor. I wish I remembered exactly what It was, but basically he found a company that needed the item so he said he has one to rent. He signed a 3 year contract for them renting it for like 15K/ month, He then went to purchase it with a 150K loan. He did pretty well on just renting one item and then sold it after. This was in Colombia.

Guest24480 · Aug 18, 2014

TaylorB said:
A friend of mine bought some sort of oil head motor. I wish I remembered exactly what It was, but basically he found a company that needed the item so he said he has one to rent. He signed a 3 year contract for them renting it for like 15K/ month, He then went to purchase it with a 150K loan. He did pretty well on just renting one item and then sold it after. This was in Colombia.

So he found a client first to validate the need and then went and bought the thing? What if the company tanked? They're still legally responsible for paying the 15k every month I'm assuming..

This is something I may do on a lower scale (pick an item, find clients, draft the legal stuff, then go out and buy what I need). Correct me if my logic is flawed in this instance.

Sent from my iPhone using Tapatalk

TaylorB · Aug 18, 2014

Well if the company tanked the company could be legally responsible for paying but if there is no company you wouldn't get paid. So it would be on you!

I think that industry in the PRODUCING sector should be fairly stable. It's usually the Exploration sectors that are much more up in the air.

vinylawesome · Aug 18, 2014

lovecharm · Aug 18, 2014

Co-incident or what.

This morning I was telling my dad whether I should rent out our SUV in Asia. As we don't use it and he told me to sell it. If I sold it then I would get about $40,000. Those sort of SUV's rents out around $2000 a month in Asia.

But obviously, my dad is concerned about people ruining the vehicle and maintenance cost going up etc. Also, we have used the vehicle for last 5 years, so its not in the tip top condition either.. So in two minds about it.

We rent out apartments, we have several in London and Asia, also thinking of getting an apartment in LA (and rent it out on airbnb when I am not around)as we have made a decision to open up an office there. Apartments has been fine, some people have damaged 2 of our apartments but we repaired them from their deposit, but we do have to do some work on the apartments once the tenant leaves but not a big problem in that sector.

However never rented out physical equipments before.. I guess the main concern was people damaging them which could cost way more to repair then the rent.

So its good to hear how other peoples feedback is and how they are doing.

Jamesdoesmith · Aug 18, 2014

I had an idea like this once

I once had a bulldog puppy and it help me get "attention from ladies"

so we could go to some beach focused town. rent out puppies that are extremely cute at an hourly rate. if it doesn't work we have a disclaimer saying it aint the puppies fault. if it does work we get a happy customer and repeat business.

rent-a-puppy

daivey · Aug 18, 2014

While i like the idea of your post something doesn't quite add up.

First your 20 and you're in university. . But somehow you came up with this idea. It's believable but what i don't believe is how you claim the profits are there.

Second you rent then to a company. Who pays to move them from site to site? You just put 5 containers in Toronto on some notin use parkinglot??? How did you get them to the first companies job site?
Like something just doesn't addup in your story i feel like this might be your parents business or something any way maybe I'm wrong hope it works out for you

MoneyDoc said:
It's pure profits right now.

Cost for me was: 5x shipping containers ($3k each); so = about $20k with everything paid for and delivered.

I rent them out to construction companies: $500-600 a month (2500-3000 a month). I currently deal with 1 company who's renting 5 from me a month. So I already made back my money + profits in year 1, now it's all pure profit (I'm 20, it's a nice little passive income while I'm in university).

I'm looking for ways to scale, to get more construction companies, aiming for 10-30k a month (so need about 20 containers out, which doesn't seem like a lot...). If you find customers and you can scale, you can make amazing profits. Most people in my area (Toronto) sell the containers... I couldn't find a lot that rented. So I decided to hit that market. Construction companies would rather rent since they're mostly seasonal, so why carry the extra inventory when its just sitting there when you can just rent.

Harley · Aug 18, 2014

TaylorB said:
A friend of mine bought some sort of oil head motor. I wish I remembered exactly what It was, but basically he found a company that needed the item so he said he has one to rent. He signed a 3 year contract for them renting it for like 15K/ month, He then went to purchase it with a 150K loan. He did pretty well on just renting one item and then sold it after. This was in Colombia.

The guy who made that decision to rent a $150K piece of equipment for 3 years at $15K/month should be fired.

sQri · Aug 18, 2014

I was thinking of entering the rental Business with Lego, but then I saw, that there is already one in Germany.
But I guess, it's hard to find a rental industry without competition.

So I think I should try it and do better than the rest

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