Vending Machines for Passive Income
One of the business categories our company works with are Vending Machines. Vending machines can be a great way to generate a new Passive income stream.
Every year, Forbes publishes the list of the Wealthiest people in America, and if you review the list carefully to understand what these people do, you quickly learn that not only they all are business owners, but also typically are very good at diversifying their revenue streams. Most of them own multiple businesses, invest in Real Estate, invest in the financial markets and develop several sources of passive income.
In addition, typically investing in vending machines (equipment) also allow some nice tax deductions. According to Section 179.org Tax Deduction: Investor can take a tax deduction up to $510,000 (Investor maintains full ownership of the equipment for the tax write-off)
We want to discuss today the Vending Machines, they can be a great source of passive income and a way to diversify your income streams. Here are the answers to some frequently asked questions:
How much does it cost to own a vending machine?
Typically the cost to own one standalone vending machines will vary starting from U$4,500 up to around U$20,000.
In the case of Laundromats, which typically have several washer/dryer machines in the location, the total project cost tends to be much higher (around U$400,000+).
In all cases, financing is typically available and vending machines projects can be started for much less.
How many vending machines do I need to have to generate enough passive income?
This will depend on the type of vending machine. But typically, we recommend you start with a few (between 2 and 6) to get a feel for the results and learn about how to optimize location, and then scale up the number of machines over time. Typically, people who generate a significant income out of this strategy will have 10 or more of these machines.
When it comes to laundromats we have seen a single Laundromat location generate 6-digit net incomes (which is great for a pretty passive business!). As you can have several machines in a single location, this increases you revenue generated per location. The main secret for this type of business is LOCATION! Some laundromat franchises have mastered the algorithm and system to identify the right location and can help their franchisees achieve great results!
How is location defined, for placement of a machine?
Many companies that offer Vending Machines are Franchises, and they have systems developed to select strategic locations. It will usually consider establishments where the demographics would likely use the products offered by the Vending Machine – for example, if the vending machine would be offering Healthy Snacks and beverages, a good location would be inside a gym. In addition, a demographic assessment is many times offered by the franchises, who have access to specialized software that run the numbers, and they use this to define target locations.
Franchises in general will discuss locations with you and you will be determining your desired location with them. They will also, in most cases, negotiate the placement with the establishment owner, on your behalf.
Remember…when it comes to vending machines…you have to select the RIGHT LOCATION, that’s key for success!
What else do I need to do as a Vending Machine owner?
In addition to identifying and placing the machines in the right locations, other things that need to be done are supplying the machine with products (wether it is cash for an ATM machine, or food products, for snacks machines) and providing regular maintenance.
Franchises that offer vending machines train their franchisees on all these variables. Many franchises also offer providing the maintenance services, and even the supplying services, for a 100% passive business option.
In any case, the vending machines will always be a great form to generate income without having to compromise much time of your week, and work great for you when you already have other businesses or activities, and just want to diversify and create another income stream!
What are some of the main categories of Vending Machines?
Here are a few examples:
- Snacks / Beverages
- Healthy Snacks
- DVD rentals
- Alkaline drinking Water