Author Topic: Passive(Almost) Income  (Read 13163 times)

Scuba Stache

  • 5 O'Clock Shadow
  • *
  • Posts: 40
  • Location: Florida
Passive(Almost) Income
« on: March 05, 2012, 08:47:43 PM »
I am looking for some investments / businesses that can be operated mostly passive. I have a full time day job, but would be willing to put in time on the weekends to create gains that would beat a stock portfolio ROI. I have looked down this path before and almost purchased some private ATM machines that could be stocked once or twice a month for incredible passive income, but I was shut down as my day job is in finance industry. (interesting topic btw if you have questions about ATMs)

Background:
25 years old
income ~75k yr
currently 25k cash I'd like to invest in this type of weekend warrior passive income scheme, but more would follow if profitable.
I have 401k, Roth IRA, and tax account with a balanced stock portfolio

I feel I don't have enough cash to get into rental homes yet, so I am trying to find smaller investments.
Trying to speed up FI , any ideas?

Mike Key

  • Stubble
  • **
  • Posts: 247
  • Age: 36
  • Location: Nomadic
  • Entrepreneur & Adventure Seeker
    • Tiny House - Big Backyard
Re: Passive(Almost) Income
« Reply #1 on: March 05, 2012, 08:50:16 PM »
You totally have enough cash to get into rentals, so long as you are not afraid of leverage.

arebelspy

  • Administrator
  • Senior Mustachian
  • *****
  • Posts: 27665
  • Age: -999
  • Location: Traveling the World
Re: Passive(Almost) Income
« Reply #2 on: March 06, 2012, 07:58:35 AM »
You totally have enough cash to get into rentals, so long as you are not afraid of leverage.

Agreed - 25k down should easily get you a nice downpayment (unless you are in San Fran or NY or something).

However rentals aren't that passive.  They are... until they aren't.  But with your willing to work weekends and such, it's not a bad mini-part time job, and returns right now are strong.  That again will depend on your location though.

You looked into ATMs, how about vending machines?
We are two former teachers who accumulated a bunch of real estate, retired at 29, and now travel the world full time with two kids.
If you want to know more about me, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

Scuba Stache

  • 5 O'Clock Shadow
  • *
  • Posts: 40
  • Location: Florida
Re: Passive(Almost) Income
« Reply #3 on: March 06, 2012, 08:22:43 AM »
You totally have enough cash to get into rentals, so long as you are not afraid of leverage.

Agreed - 25k down should easily get you a nice downpayment (unless you are in San Fran or NY or something).

However rentals aren't that passive.  They are... until they aren't.  But with your willing to work weekends and such, it's not a bad mini-part time job, and returns right now are strong.  That again will depend on your location though.

You looked into ATMs, how about vending machines?

I have looked into vending machines, but they were not nearly as attractive as other options like ATM's where my only inventory is cash which I can monitor online and withdrawals are direct deposited to my bank account. Other self service machines I briefly looked into are ice bag machines(I am in north FL), but they had too high a cost for small return.

Since being locked out of the ATM machines(until I have F you money for my day job), I have looked more seriously into rental properties, but have been hesitant to take that large leap into 2nd mortgage.

JohnGalt

  • Bristles
  • ***
  • Posts: 481
  • Age: 34
  • Location: TX
Re: Passive(Almost) Income
« Reply #4 on: March 06, 2012, 08:41:53 AM »
Hey Scuba Stash - I'm looking for similar investments and, like you, looked into vending routes but didn't think the return made it worthwhile.  I'd never thought of operating my own ATM though - I'd be interested to learn what you found when you were researching if you don't mind sharing.

Scuba Stache

  • 5 O'Clock Shadow
  • *
  • Posts: 40
  • Location: Florida
Re: Passive(Almost) Income
« Reply #5 on: March 06, 2012, 10:16:29 AM »
Hey Scuba Stash - I'm looking for similar investments and, like you, looked into vending routes but didn't think the return made it worthwhile.  I'd never thought of operating my own ATM though - I'd be interested to learn what you found when you were researching if you don't mind sharing.
Of course, the number one item for an ATM route is LOCATION. The general requirement is to have a location that 400 people walk by a day, it is estimated around 2-3% of those will stop and use the machine. The locations are secured by a profit share instead of renting the spot. They would provide floor space, power, and possibly network connection.
The best part is..... the numbers
ATM cost - ~2k used, 3k new
Cash stock - ~6-8k month for average location (can be cut down to 3-4k if you restock bi weekly)
Average return for a location like this would be ~$300/mo after profit share
Math - 400 people walk by with say 2% using the machine at a 2.50 service charge(the location generally takes ~ $1 of that) = 8 people a day = 240/mo * 1.50 profit each use = $360
maybe you have to pay $30/month for wireless network connection that would leave $330/mo or ~4k a year on the ~10k investment

I see this as EXTREMELY low risk as the machine is the only sunk cost(6mo payback) and the cash is still technically liquid if you needed to go take some out. The location is generally secured with a 5 yr contract.

The other option if you don't want to be a salesman is to purchase somebody's route, which are generally valued at ~12 -18 months net income - see this site for some listings http://www.atmbusinessforsale.com/

velocistar237

  • Handlebar Stache
  • *****
  • Posts: 1422
  • Location: Metro Boston
Re: Passive(Almost) Income
« Reply #6 on: March 06, 2012, 10:40:28 AM »
With regard to the ATM, how does one deter theft and vandalism, and would an owner have to do the re-stocking, possibly carrying a gun and driving an armored car, or would this be hired out? Is there ATM insurance?

Scuba Stache

  • 5 O'Clock Shadow
  • *
  • Posts: 40
  • Location: Florida
Re: Passive(Almost) Income
« Reply #7 on: March 06, 2012, 11:01:19 AM »
With regard to the ATM, how does one deter theft and vandalism, and would an owner have to do the re-stocking, possibly carrying a gun and driving an armored car, or would this be hired out? Is there ATM insurance?
Remember that these would be inside of businesses which would have security cameras. The ATMs have a built in safe and the machine is bolted to the floor making it pretty difficult to break. Insurance is possible, but as a money mustachian, I would recommend you save those payments and in the extremely unlikely case somebody breaks into the business and cracks the safe... you just take the loss. You as the ATM owner would restock the machine as often or as little as you like(depending on what you stock it with). The cash is in a large cassette which you would take to a back room to refill and then load back into the machine(public doesn't see you handling cash). I would likely carry a concealed weapon, but this would not truly be a concern (I just enjoy my right to do so). You would not hire an armored car unless you had many machines fairly close together as it would take a large cut of your profits (but would be 100% passive except for maintenance!)
« Last Edit: March 06, 2012, 11:04:24 AM by Scuba Stache »

goiyala

  • 5 O'Clock Shadow
  • *
  • Posts: 13
  • Location: Bay Area
Re: Passive(Almost) Income
« Reply #8 on: March 07, 2012, 05:05:12 PM »
Hi Scuba Stash - thanks for posting the details about your ATM experience. An interesting idea - and also got me hooked onto researching it a bit more. I looked around and there seem to be some websites which are like a on-stop shop for ATMs. They sell them and also deploy them in high-traffic areas. However, a couple of websites I looked at also say they are looking for 3rd party investors and might give them location leads - ones which they themselves do not want to cover due to low traffic. Since I don't think I can find a 'new' 'undiscovered' high-traffic area myself, do you think its worthwhile to contact these companies for location leads?

arebelspy

  • Administrator
  • Senior Mustachian
  • *****
  • Posts: 27665
  • Age: -999
  • Location: Traveling the World
Re: Passive(Almost) Income
« Reply #9 on: March 07, 2012, 08:22:07 PM »
Do they have ATMs that will do lower bills (1s and 5s in addition to 20s)?

I have an idea for good places for a lower denominatn ATM, that will give a much high ROI...
We are two former teachers who accumulated a bunch of real estate, retired at 29, and now travel the world full time with two kids.
If you want to know more about me, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

Scuba Stache

  • 5 O'Clock Shadow
  • *
  • Posts: 40
  • Location: Florida
Re: Passive(Almost) Income
« Reply #10 on: March 08, 2012, 08:55:52 AM »
Hi Scuba Stash - thanks for posting the details about your ATM experience. An interesting idea - and also got me hooked onto researching it a bit more. I looked around and there seem to be some websites which are like a on-stop shop for ATMs. They sell them and also deploy them in high-traffic areas. However, a couple of websites I looked at also say they are looking for 3rd party investors and might give them location leads - ones which they themselves do not want to cover due to low traffic. Since I don't think I can find a 'new' 'undiscovered' high-traffic area myself, do you think its worthwhile to contact these companies for location leads?

I would not pay for leads(if it was a good lead they would have acted on it themselves), but would pay to buy somebody's route that is moving out of the area or retiring. I would not like to be the salesman to find a good spot, but was instead looking to purchase routes (3-4 good opportunities came up over the last year of my research). I was also planning on leveraging the knowledge of the previous owner as i would be a rookie in this business. Check Craigslist and the site I listed earlier for potential routes for sale.

Arebelspy - You can set up machines to dispense multiple bill denominations, but it will require a little additional cost and would require you to stock it more often.

Disclaimer: All of my knowledge is due to a year of heavy research only, I was setting money aside and about to leap into this business when I was stopped due to conflict of interest with my day job. The most valuable information I received was through calling owners selling their routes. I would latch on to them as ask questions until they were tired of talking to me :)


dennisCarter

  • Guest
ATM Placement Industry
« Reply #11 on: July 28, 2012, 10:55:11 AM »
The key factor of being winning in the ATM business field is to find best ATM placement places that will make money for you. ATM sales are based on traffic count, so let's figure out how many people will use your new ATM machine on a daily basis. That formula is used by every ATM dealer and ATM distributor in the state when placing  ATM Machines.

MOD EDIT: Link removed.
« Last Edit: July 28, 2012, 11:27:28 AM by arebelspy »

Mr Mark

  • Handlebar Stache
  • *****
  • Posts: 1150
  • Location: Planet Earth
  • Achieved Financial Independence summer 2014. RE'18
Re: Passive(Almost) Income
« Reply #12 on: July 31, 2012, 03:16:48 PM »
I'd go for the rentals rather than ATMs, myself.

Do the research,calc. Cash flows. And maybe scope100 properties to find the one gem.

25k def. enough to get a great place.

JohnGalt

  • Bristles
  • ***
  • Posts: 481
  • Age: 34
  • Location: TX
Re: Passive(Almost) Income
« Reply #13 on: August 01, 2012, 07:35:57 PM »
Has anyone ever looked into buying a coin laundromat or car wash?

Scuba Stache

  • 5 O'Clock Shadow
  • *
  • Posts: 40
  • Location: Florida
Re: Passive(Almost) Income
« Reply #14 on: August 02, 2012, 07:22:51 AM »
Has anyone ever looked into buying a coin laundromat or car wash?

I have not, but would be very interested in hearing from some who have. Laundromat seems to have fairly low startup costs and it has run through my head, but the Car Wash seems like it would be extremely expensive with the equipment.
Anyone have experience in these areas?

ShavinItForLater

  • Stubble
  • **
  • Posts: 149
Re: Passive(Almost) Income
« Reply #15 on: August 12, 2012, 01:53:51 PM »
With regard to the ATM, how does one deter theft and vandalism, and would an owner have to do the re-stocking, possibly carrying a gun and driving an armored car, or would this be hired out? Is there ATM insurance?
Remember that these would be inside of businesses which would have security cameras. The ATMs have a built in safe and the machine is bolted to the floor making it pretty difficult to break. Insurance is possible, but as a money mustachian, I would recommend you save those payments and in the extremely unlikely case somebody breaks into the business and cracks the safe... you just take the loss. You as the ATM owner would restock the machine as often or as little as you like(depending on what you stock it with). The cash is in a large cassette which you would take to a back room to refill and then load back into the machine(public doesn't see you handling cash). I would likely carry a concealed weapon, but this would not truly be a concern (I just enjoy my right to do so). You would not hire an armored car unless you had many machines fairly close together as it would take a large cut of your profits (but would be 100% passive except for maintenance!)

Wouldn't the biggest risk of robbery be as you're walking/biking/driving around with large cassettes full of cash?  If someone is going to "hit" an ATM I would assume they'd be doing recon and planning it carefully, they'd see you walking in and out with no armored car or weapon in sight.  They might even start following you up and down your route.  Probably wouldn't be too hard to pick a spot where you're vulnerable, or just hit your car as you go in to refill the first ATM.

I'm assuming you'd be filling the cassettes in a bank.
« Last Edit: August 12, 2012, 01:56:37 PM by ShavinItForLater »

Scuba Stache

  • 5 O'Clock Shadow
  • *
  • Posts: 40
  • Location: Florida
Re: Passive(Almost) Income
« Reply #16 on: August 14, 2012, 08:55:58 AM »
With regard to the ATM, how does one deter theft and vandalism, and would an owner have to do the re-stocking, possibly carrying a gun and driving an armored car, or would this be hired out? Is there ATM insurance?
Remember that these would be inside of businesses which would have security cameras. The ATMs have a built in safe and the machine is bolted to the floor making it pretty difficult to break. Insurance is possible, but as a money mustachian, I would recommend you save those payments and in the extremely unlikely case somebody breaks into the business and cracks the safe... you just take the loss. You as the ATM owner would restock the machine as often or as little as you like(depending on what you stock it with). The cash is in a large cassette which you would take to a back room to refill and then load back into the machine(public doesn't see you handling cash). I would likely carry a concealed weapon, but this would not truly be a concern (I just enjoy my right to do so). You would not hire an armored car unless you had many machines fairly close together as it would take a large cut of your profits (but would be 100% passive except for maintenance!)

Wouldn't the biggest risk of robbery be as you're walking/biking/driving around with large cassettes full of cash?  If someone is going to "hit" an ATM I would assume they'd be doing recon and planning it carefully, they'd see you walking in and out with no armored car or weapon in sight.  They might even start following you up and down your route.  Probably wouldn't be too hard to pick a spot where you're vulnerable, or just hit your car as you go in to refill the first ATM.

I'm assuming you'd be filling the cassettes in a bank.

It seems the best defense against this would be to avoid a strict routine, remember you can easily stock these machines for many months if you prefer. Minimum cash stock 1 month + that you can refill in minutes any time of any day of any week would be tough to "hit". An armored car would have a routine, you would not.

Any thoughts on the Laundromat / Car Wash from the group? Or other ideas with < 20k startup cost

JohnGalt

  • Bristles
  • ***
  • Posts: 481
  • Age: 34
  • Location: TX
Re: Passive(Almost) Income
« Reply #17 on: August 14, 2012, 09:06:48 AM »
With regard to the ATM, how does one deter theft and vandalism, and would an owner have to do the re-stocking, possibly carrying a gun and driving an armored car, or would this be hired out? Is there ATM insurance?
Remember that these would be inside of businesses which would have security cameras. The ATMs have a built in safe and the machine is bolted to the floor making it pretty difficult to break. Insurance is possible, but as a money mustachian, I would recommend you save those payments and in the extremely unlikely case somebody breaks into the business and cracks the safe... you just take the loss. You as the ATM owner would restock the machine as often or as little as you like(depending on what you stock it with). The cash is in a large cassette which you would take to a back room to refill and then load back into the machine(public doesn't see you handling cash). I would likely carry a concealed weapon, but this would not truly be a concern (I just enjoy my right to do so). You would not hire an armored car unless you had many machines fairly close together as it would take a large cut of your profits (but would be 100% passive except for maintenance!)

Wouldn't the biggest risk of robbery be as you're walking/biking/driving around with large cassettes full of cash?  If someone is going to "hit" an ATM I would assume they'd be doing recon and planning it carefully, they'd see you walking in and out with no armored car or weapon in sight.  They might even start following you up and down your route.  Probably wouldn't be too hard to pick a spot where you're vulnerable, or just hit your car as you go in to refill the first ATM.

I'm assuming you'd be filling the cassettes in a bank.

It seems the best defense against this would be to avoid a strict routine, remember you can easily stock these machines for many months if you prefer. Minimum cash stock 1 month + that you can refill in minutes any time of any day of any week would be tough to "hit". An armored car would have a routine, you would not.

Any thoughts on the Laundromat / Car Wash from the group? Or other ideas with < 20k startup cost

I think car washes are going to be way beyond the $20k startup cost.

Laundromats are probably a little higher too.  I've been watching craigslist and a few other local business broker websites and see them for sale for as low as $35k - but usually in the $50k-$100k range.  Have not done anything more than look at adds so I don't have any idea if the numbers work.  Don't know what it would cost to start from scratch.

MsSindy

  • Pencil Stache
  • ****
  • Posts: 535
  • Age: 52
  • Location: Philly Burbs
Re: Passive(Almost) Income
« Reply #18 on: August 21, 2012, 09:58:23 AM »
With regards to laundromats, they are def not passive.  We researched them for almost a year before deciding that they were not for us.  They need to be run like a true business.  First, you need to have employees - these are usually low-paid workers (read: don't show up on time, call in sick, or quit).  You also need to have a way to repair your machinery - depending on the age of the equipment this could get costly if hired out, or a royal pain if you're skilled enough to do it yourself.  You also need to keep the quarter machine full (or install expensive card-readers).  Also, your customer base is static.  Meaning, that no matter how 'good' you run your business, people are only going to travel in a small radius to do their laundry.  You are often competing on price with other mats, and not service.  In addition, you have no control over price increases in your utilities which are your major variable expense and incredibly hard to pass on to the customer.  Oh, and according to the laundromat forums, vandalism and theft are very real and occuring incidents - many old timers carry guns when collecting their monies.

The upside is that it is a cash business - the downside is that when buying a business, it's very hard to confirm the income the owner is claiming.  One non-traditional situation that might work for someone is if they owned the building that the mat was in and lived in the apt upstairs - that type of set-up could possibly work and lend itself to a mustachian way of life.

Mr. Everyday Dollar

  • 5 O'Clock Shadow
  • *
  • Posts: 10
  • Location: Wisconsin
    • http://mreverydaydollar.com
Re: Passive(Almost) Income
« Reply #19 on: August 31, 2012, 01:53:08 PM »
I spent some time looking into these sorts of businesses - ATMs, laundromats, car washes. After awhile I figured that I would rather invest money into the stock market and learn investing really well because I can do it all from the comfort of my computer. The same goes for opting to invest in REITs over real estate. It's not that I don't like getting my hands dirty, it's just way more convenient for me.

One thing I wanted to mention about ATMs is that I would be concerned about the ability to pay for items via credit cards/debit cards and even now via smartphones as slowly eroding the ATM (cash) market. For the foreseeable future there will be the need for ATMs and the need for cash transactions but with technologies like Square (smartphone app tied to your credit card) I think we will see a shift away from cash. At Starbucks this fall they will start accepting Square - you'll be able to pay without even getting your phone out of your pocket! Your picture will pop up on the register when you walk in the store.

In my opinion the ATM eventually will be a thing of the past, like a pay phone. How long that will take, my crystal ball is broken at the moment. But, people will always want to wash their clothes and cars!

ItemB

  • 5 O'Clock Shadow
  • *
  • Posts: 1
Re: Passive(Almost) Income
« Reply #20 on: February 04, 2013, 09:47:43 PM »
I know this thread is almost a year old(new to the blog and forum been done lots of reading), but I am looking for something just like the OP. Was wondering if or what the OP decided on doing with his 25K? Or if anybody has some new ideas?