_[classroom] Equipment Leasing is in the Alternative Investment category. Along with Oil and Gas and the Managed Futures/Forex I talked about last Saturday. Has anyone ever leased a car? Why did you do it? Was it to have a lower payment and not actually own a depreciating asset?
xxxxxxx is a leading equipment leasing and financial services company with more than 30 years of history in the United States. xxxxxxx’s expertise is in structuring Information Technology, Medical and Telecommunications equipment leases for large credit worthy companies XXXXX generally provides lease financing for 12-36 month, fair market value leases specializing primarily in information technology, medical technology, and telecommunications equipment. So you can see by what is leased, what types of companies or businesses would utilize these types of services. This firm will charge less than the bank, but enough to make a profit for investors as well as themselves.
There are short term funds and longer term funds.
Short term programs will yield about 8% per year and last 4 to 6 years. Longer term programs will start at 8%, 9 in year 3+ up to 10% over the life of the program. These programs that have a higher yield tend to have a longer maturity of 8 to 10 years.
Read More Link on Right
_ I would venture to guess that most if not all of the Fortune 500 companies lease equipment to some extent. Also, leases on equipment have some tax advantages for the companies.
They provide great income for those looking to beat bank interest rates. You might be asking, Is it guaranteed? And the answer is NO. Also, these programs are NOT LIQUID. Like I tell clients, you can have High Yield, Safety of Principle and Liquidity, but NOT all at the same time. But, let’s suppose we leased an MRI to a hospital. If they didn’t pay the lease, we would repossess the equipment. MRIs are busy 24 hours a day 7 days a week and a profit center for the hospital. Why would they let it be reposed? Another example, say a Utilility Company leases a large printer for processing and printing bills. How will they bill the customers if they can’t print the statements?
This is the type of EQUIPMENT LEASING I will cover today. Any questions?
[shar35] Thanks for coming to talk to us today. What is the best way to participate in leasing assets on a passive basis?
[classroom] They are all passive. you hire a company to do this for you. they give you a monthly income check. you give them capital to work with.
[birdie] Do you get the depreciation credits?
[classroom] NO .... its paid out as ordinary income like bank interest
[mike1422] Who is responsible for the maintenance of the equipment?
[classroom] Depends on the lease. but investors never are responsible either company or the leasee.
[codreamer59] How would a novice get started in the leasing sector as an alternative investment company?
[classroom] You don't want to be the company. There are many providers that do this for clients. Ask your broker that you would like to look into Equipment Leasing. Make sure the company has a good trackrecord and been in business awhile.
[codreamer59] How do you find a reputable company to do this for you?
[classroom] Ask a good INDEPENDENT broker. They normally have the best products in this sector.
[dinarup] What is a typical initial investment in this type of product?
[classroom] there at 2 types of programs. one for anyone and another for high net worth individuals - from $10k up.
[mickey] What amount of money is required to participate in these?
[classroom] Normally has a minimum of 25k to start for the "public" programs. Private for High Net Worth is higher - $50 to 100k.
[shar35] Where would one find leasing companies that are looking for capital? What are some things to consider when looking at a leasing company to invest in?
[classroom] Longevitiy and stability of companies THEY lease too. You want some government and Fortune 500 companies. Brokers sell products every quarter. Just ask your financial advisor. And you want a diversified product. you don't want all the money in one piece of equipent or with one company
[imagine] How does one find, compare and evaluate these companies to invest in??
[classroom] Get some advice from your Advisor. He will pick one or 2 to choose from. om] You can't just buy this on the internet or down the street - its like a mutual fund ..... We pool all over our money and the company does the leasing
[koolwhip2] How much of a cut is the company getting for maintenance and basically doing all the work while we, the investor, just put up the capital?
[classroom] If you read the intro ... these programs pay about 8 to 10%. They get overage. but they have to give you your money back at the end. if than can return more than 100% of capital in the end they get profit sharing. so the reinvest most of the overage after expenses in more leases to generate more income and profits at the termination of the program.
[artdiva] So, if I understand this, we wouldn't own the item being leased, just provide the money to the company that will handle finding the appropriate client for the item being leased? That company collects from the client and then pays us our cut?
[classroom] Yes, exactly
[MsMarple] What happens to the asset/equipment after the lease expires? Is it a lease/purchase?
[classroom] They have a projected Rate of Return but it is a guideline. about 95% of the time they pay out expected income its dependable .... They can sell the asset or release it
- most are sold
[Dimples] How liquid is this type of investment? And what is a good ROI?
[classroom] They pay 8 to 10% per year and normally 10 to 20% capital gain at the end. ...... This investment is NOT LIQUID AT ALL so don't tie up more than you might need before the end.
[10urout] What range of return can one hope for ...x% to X% ?
[classroom] About 8 to 14% average annual return ... every program is different and not guaranteed.
[speedy gonzales] You are continually giving them money?
[classroom] NO. You can do another program next year if you like, but you will never add to the previous one.
[luckysquirrel] Is there any chance at all of loosing the principal?
[classroom] There is always a chance but IBM, John Deere, Detroit Edison would all have to go out of business at the same time. Those are just examples of typical companies. If that happened we really don't have a country anymore. The company I represent has never not returned capital in the end.
[dinarup] Can this type of investment of capital be insured?
[classroom] That is a good question. I am not sure but my best guess is 'no'. I would reduce the income and most wouldn't want it. Each program has at least 15 - 30 different leasees (companies). If they all went under we are bigger trouble. You only want to put 5 to 10% of your cash assets in a leasing program.
[flboy] Are there any of these companies that lease products that you might want to stay away from, such as dealing in state-of-the-art today but boat anchors next year?
[classroom] That's why the leases are 24 to 36 months. They will turn the leases over about 5x in 10 years
[flameon] How do you diversify the investments you make in Leasing?
[classroom] The company that provides the service will do that for you.
[racehorse] Of the different types of equipment leased which products do you deem to be a good investment given our current economy? Medical, technical, construction.....
[classroom] I like medical .... but he company decides that. Its good to have more than one source. more than one type of lease. They will diversify for you
[Asells.] classroom Who would be "the company"?
[classroom] The one your financial advisor recommends for you.
[oxglove] What products are the most lucrative and which would you recommend as best with the most solid results, corporate or government?
[classroom] Mix of both. right now government will just print money to pay bills guaranteed revenue. they pay a lower interest rate normally tho. so you want corporate mixed in.
[codreamer59] Do the contracts vary in length? What is the average length of your contract (investment)?
[classroom] Any where from 4 to 10 years depending on the program
[artdiva] In the intro you say the short term programs run 4 - 6 years, but leases can be 12 - 36 months long. So, can your investment also be tailored to a 1 - 3 year program?
[classroom] Not normally ... there are expenses of the company that have to be made back. I have never seen one less than 4 years
[dinarchaser] To confirm, you said typically 4 - 6 years for an 8% yield and up to 10 years for more like a 10% yield?? Also, these rates would be for a nigh net woth investment of a minimum of $50 - 100K?
[classroom] Generally, yes. Every program is different but yes you are right.
[codreamer59] What type of fees are involved in this type of investment?
[classroom] Broker gets paid; sales and marketing expenses inside the program but you pay none of that. The company pays it all. You put up capital for investment and get dividends
[sfmhi] Are these leasing companies governed or regulated? TY
[classroom] Yes. They fall under FINRA just like all other financial products through your advisor.
[1+1] classroom I'd be happy if I can consistently get 3%, is that realistic?
[classroom] Totally realistic .. 8% is realistic but its not LIQUID, so only small percentage
[mike1422] Typically at what period of time can I pull out my pricipal investment and profits?
[classroom] You can take income quarterly or reinvest it into more leases for compounding effect. There is NO principle withdrawl until the end
[imagine] Are there companies like you are describing that lease oil/gas drilling rigs or equipment like that??
[classroom] YES ... and will will cover oil and gas next week Tuesday
[eleanor] Can I own the company that leases the equipment as well as the company leasing the equipment (any advantage)?
[classroom] No real advantage
[tc0043] Are the earnings paid out each year or do they get reinvested and grow tax deferred or taxed in the current year?
[classroom] Taxed annually. You can reinvest if you want but then the dividends are locked up til the end. Most take them in cash and invest elsewhere
[dinarup] Is the 8% realization annually? $100,000 * .08 = $8000.
[classroom] Yes but paid 2% per quarter; some pay monthly. 8/12 = .75% monthly
[kjh] Is there a minimum amount of $$ that can be invested in this type of venture?
[classroom] 10,000 and up. See above
[10urout] Would you please review the taxation of lease investments again?
[classroom] Ordinary income for the investor.
[flboy] Can these be structured to pay out as long term capital gains, a year and a day before the first income?
[classroom] NOPE sorry. Lease payment income has to be distributed in the year received (or a certain percentage of the income, not a tax lawyer).