New to the Leasing Business? 4 Industries You Should Aim

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When people think of the word “lease,” they immediately jump to personal vehicles and homes or apartments. However, there are many other leasing industries that can be extremely profitable.

In fact, some fields, like medical and construction, almost solely lease their equipment instead of buying. Entering into one of these fields can be a great way to jumpstart your leasing business and bring in substantial revenue. You don’t have to know a thing about real estate, residential property management, or dealing with live-in tenants to succeed when leasing products instead of property.

Interested in the concept of making money by leasing equipment?

Here are four profitable industries to enter if you want to lease products to companies in need.

1. Commercial Vehicles

You’ve probably heard of people signing leases for their personal vehicles, but what about commercial vehicles? In the past nine years, the production of commercial vehicles in the U.S. has increased from 5 Million to over 8 Million. With booming businesses and a constant increase in online sales and shipping needs, we can expect to see the demand for large trucks continue to grow.

When most businesses become large enough to need commercial trucks for product transportation, they don’t have the cash to buy a fleet of vehicles upfront. Additionally, the need for commercial trucks ebbs and flows with customer interest, so a company might not be interested in purchasing a set number of vehicles. Their cash flow and order needs are too unpredictable.

That’s where a leasing company enters the picture. Businesses can lease the commercial vehicles they need while still staying up to date on the latest models. As their needs grow and shift, they can alter their lease agreement to reflect those needs with minimal losses.

Delivery trucks aren’t the only commercial vehicles available for leasing. Passenger vans, trailers, tractors, and personal trucks are all viable contenders for a leasing company. Think about what vehicles people need for short periods of time, but aren’t willing to purchase permanently.

If the thought of managing the leases on multiple vehicles across the country gives you a headache, know that there are plenty of software products available that can help with the process.

2. Restaurant Equipment

Think about one of the newest restaurants that popped up recently near you. Do you think they had the cash and means to obtain all of their equipment immediately? Silverware, pots, pans, ovens, stoves, knives, everything? Considering that it usually costs at least 30 grand to buy the initial restaurant equipment, the answer is probably no.

New restaurants have one of the highest failure rates – roughly 30% fail within the first year. Therefore, most owners are not willing to spend a fortune upfront on the necessary equipment. They’d prefer to lease from year-to-year until they know the restaurant can turn a stable profit.

Although starting a restaurant equipment leasing business has many upfront expenses, turning a profit is relatively simple once you have the goods and the customers that need them. Leasing a full set of kitchen equipment usually runs anywhere from a grand to a five-grand. You’ll tip the heavier end of the profit scale if you can lease big items that people are especially reluctant to buy, like huge freezers and high-end ovens.

3. Construction Equipment

Speaking of temporary product needs, what’s more, temporary than a construction project? The industry requires the use of large, heavy, and expensive machines. Most contractors also want to use the best tools available, which means purchasing them would be an enormous expense.

Generally, it’s cheaper for construction contractors to obtain the tools they need for specific projects on lease. This keeps their overhead costs down while also giving them top-notch products to help get the job done. Not all construction equipment pieces are versatile, so by leasing, contractors can only use the products when they need them.

According to a report from Grand View Research, it’s estimated that the construction equipment rental market will reach $230 billion by the year 2025. After the financial crisis in the early 2000s, contractors simply aren’t willing to stick their necks out and spend lots of money investing in construction products. They feel much safer to avail of the equipment on lease, from project-to-project, which is why the industry is booming.

The biggest tool you should consider leasing to others? Excavators.

Grand View Research indicates that more than half of the market sales are comprised of earth-moving equipment. Get yourself some heavy construction machinery and hop on the money-making bandwagon within the next few years.

4. Medical Equipment

When you walk into a hospital, think of all the equipment that surrounds you. From MRIs to portable X-ray machines, much of what you see is probably leased, depending on the company and its finances. This is especially true in new or small medical facilities.

In the medical industry, more than in any other, it’s vital that all hardware and software be as up-to-date as possible. Advancements are made every year, which makes purchasing the newest technology almost impossible unless you have a vast source of financing. Many doctor’s offices, including dentists and specialists, choose to obtain the latest and greatest items on lease rather than go shopping every year or so.

Even simple objects, like hospital beds and wheelchairs, are often availed to medical facilities by companies like WM Supply or UHS on lease. It’s easier to obtain equipment like this on an as-needed basis than it is to buy them up front and estimate the numbers.

According to MD Magazine, almost 70 percent of medical equipment is leased or financed. If you have the means to obtain healthcare products in a specific field, tap into the new medical services in your area. Medical offices are always looking for ways to obtain new technology for a fair price.

Another reason medical offices love to lease? Due to the fact they aren’t actually purchasing the equipment, the lease can be considered a “tax-deductible overhead expense.” This makes it even more affordable for medical practices to rent than to buy.

In Summary

Many signs point to an increase in the popularity of equipment leasing throughout America. The flexibility and cost-effectiveness of leasing are simply too beneficial for many business owners to pass up. Leasing companies and their customers can benefit from this transition.

If you’re looking for a business idea, or if you have the extra money to invest in a field of your interest, considering leasing in one of the four above industries. No matter what the economy might bring in the next few years, it’s almost guaranteed that these four categories will still be in need of equipment leasing services.

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