Passive Income with Bicycle Rentals

Have you ever rented a bicycle in your life? I think we all have. Whether it was an old-school road cruiser or a brand new mountain bike, at one point or another it has made sense to rent a bike.

My Experience Renting a Bike

My wife and I currently live in West Michigan, but we love to vacation up north at Macinac Island. Since it’s an island with no bridges, it’s obviously not accessible by car, but that’s exactly the point. Ferries are used to transport ones self from the mainland to the island, and once you step foot on Macinac, it’s like you’ve travelled back in time.

Horses and buggies, bicyclers, and hundreds of pedestrians on foot: this is what you’ll see on the island. To preserve the fine atmosphere of the island, cars are simply not allowed. If you think that you’d enjoy the late 19th century, you’ll absolutely love this place.

On our last trip, we decided to scope out more than just the main streets of the island, so to do a little more exploration we rented some bicycles! The price didn’t seem overly steep at $7 an hour, so we gladly paid the man and had a blast for the next half-day or so.

Initial Expense of a Bicycle Rental Business

For Macinac Island, your initial expenses could be pretty steep, mostly because of the cost of property. In order to get a premium chunk of land on the main street, you could easily shell out $500,000! And that’s just for the property. If there’s a house sitting on it, you could be looking at $2.5+ million. Let’s just assume that you get lucky though, and find a vacant hunk of property.

There’s also the cost of the bikes of course, but mostly, these bike rentals are nothing special and might only cost $100 if they’re found off the island. At that price, 100 bikes will run you $10,000.

Finally, you’ll obviously have to maintain and replace some bikes. Each year, this will probably run you another $2,000.

If you’d like to earn 100% passive income, then you could hire an employee to rent the bikes out for you (after all, it’s not rocket science). This will most likely cost you $80 a day for 180 days. That calculates to another $14,400 in expenses. Still pennies compare to the cost of the property.

Potential Income of Bicycle Rentals

The first positive of bike rentals is that they aren’t that large. You could own 100 bikes and storage wouldn’t really be that much of an issue. That’s actually go with that nice round number actually. Let’s say that you had 100 bikes and rented them out for $7 an hour.

Since the island is only functional for tourism 6 months out of the year, we’ll figure that a full business year is 180 days. If we can rent out an average of 75 bikes (which I think is entirely possible) per day, each for a half-day. That’s an average of $2,100 per day (75 bikes x 4 hours per day x $7). After 180 days, you potential income is $378,000!! If your property costs you $500,000, you could make up the money in less than 2 years (even with reoccurring expenses)!!

Other Bicycle Rentals

This example only touched on bike rentals at Macinac, but the principles are the same for all. If you live near some bike trails and could rent out 75 bicycles a day, you can go by the same model as above. Your margins might actually be better though, since you won’t have to purchase a $500,000 piece of property.

This is an awesome business and I really can’t wait to get started on it. Time to start saving up $500,000! Give me a couple of years and we’ll be there, ready to make some big bucks in the summer. 🙂

6 thoughts on “Passive Income with Bicycle Rentals

  1. Interesting take on seeing a hidden demand and moving in to fulfill it. I suspect like anything else, there’s some level of liability insurance that you would have to carry in case of injury due to bike malfunction, but it is probably manageable .

    1. I don’t think 75 is really that much. These bike rental places seem to have hundreds of bikes to choose from. I’ll be looking very carefully at this investment option in the future. 🙂

    1. When you rent a bike, there are forms to sign to state that the company is not liable for any accidents that may occur, but that’s about it. I’m sure the company would purchase insurance just in case something happened though too.

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