There has been a vacant lot in my neighborhood for the past couple of years, and there didn’t seem to be much interest in purchasing it until just recently. This lot was at the intersection of two very busy roads. I thought that maybe it would be a good place for a gas station, but the roads were just too busy. It would be tough getting in and out of the station if you were in a time crunch.
This lot was purchased and there was absolutely no renovation done to it. The property was basically a mix of grass and gravel (mostly gravel), and that’s how it remains today, even after the purchase. The only thing that has changed with this lot is the fact that there are cars on it now. Nope, it’s not a parking lot, it’s a car lot.
This is not the typical car lot though, this is a consignment lot. The owner of the lot gives permission for other people to park their cars there for sale, and he earns money in one of two ways: (1) he can charge a monthly fee for the cars that sit there, or (2) he can charge a commission on each car that’s sold on his lot. It’s a pretty sweet operation, and there isn’t much that needs to be done to earn an income. You just have to receive a few phone calls, make out some invoices, and that’s it! Sounds pretty passive to me.
Consignment Lot for Passive Income
I wonder how profitable this venture would be? Let’s say we use the method of lot rent for each vehicle that’s for sale on our property. We’ll charge $150 a month. On average, I figure we would host about 10 cars per month.
The lot is not large and is really impractical for almost every business use, so it comes cheap at $10,000.
Income
- 10 cars @ $150 each = $1,500/month
Expenses
- Initial payment of $10,000 (paid with cash)
- Property tax of $150 each year
After just 7 months, we will recoup our initial investment of $10,000 and the rest is pure profit! This business will require only a couple of hours worth of work each week, and the earnings are $18,000 per year! It sounds like a pretty good investment to me.
This business plan is incredibly simple but effective! What do you think of it?