U Turn vending machines

[gazza]

I am looking at potentially purchasing a recently established vending machine operation as a source of passive income. The particular vending machines are called U turn machines distributed by a company called Austway. From searching posts on the forum, I see a number of forumites either have currently got vending machine opearations or have experience with them and I would be interested in any advice on the subject, in particular anyone with experience in U Turn machines/Austway operations.

cheers
Gazza

 

[Peter Parker]

I am looking at potentially purchasing a recently established vending machine operation as a source of passive income.

One forumite I know went into this but got out of it. She found it more work restocking than it was worth.

Are you seeking real 'passive income' or would you be happy to 'buy yourself a job' with all the associated commitments? If the latter, it could be a suitable venture, especially if you can get machines in popular locations!

Regards, Peter

 

[Sunfish]

I am looking at potentially purchasing a recently established vending machine operation as a source of passive income. The particular vending machines are called U turn machines distributed by a company called Austway. From searching posts on the forum, I see a number of forumites either have currently got vending machine opearations or have experience with them and I would be interested in any advice on the subject, in particular anyone with experience in U Turn machines/Austway operations.

cheers
Gazza

I have no idea about U Turn but the term "recently established" would make me run.

PM me if you're serious and after you've done your homework.

Thommo

 

[fredo]

Vending

Gazza
I currently have 3 vending machines and after paying $5,400 for the 3 get $93 per month for doing nothing except owning them

I depreciate them at 20% per annum and equate that I get 12% return after tax

PM me if you want more info

Frado

 

[geoffw]

Fredo (or Frado?)

Not sure about this.

You earn $93 pm from them- I make that 20.6% return pa.

But they depreciate at 20% pa.

So it's an asset with declining value.

In the long term they will only make money if they last longer than 5 years? Is that a gamble for you?

 

[fredo]

Ok depreciate at 20% over 5 years with ongoing income of 93 per mth
I make that a prety good nvestment
12% after tax

 

[geoffw]

Fredo

Sorry, I didn't explain well.

Sure, you get $93 pm. That's a tad over 20% per annum return.

So your income is $1116 pa.

And you offset $1080 depreciation against that- so it's tax neutral income.

But the tax depreciation is 20% pa- implying that the machines have a five year useful lifetime. So it the machine lasts less than five years before it gives up functioning, you're behind. And if it lasts more, then you're ahead.

A machine, I assume, will not appreciate in value- so you could never sell in the future for a profit.

So if the asset is declining while the income is just OK, I would not see it as a good investment. On your figures, I'd see it as neutral- unless I've read something wrong.

 

[Sunfish]

Most venders last more than 5yrs. Most of mine are older than that and I think we depreciate ours @30%. The only reason I have ever scrapped one is from vandalism, not age. See http://www.somersoft.com/forums/gallery/showphoto.php?photo=818&password=&sort=1&cat=500&page=1

It was different during the space-invader craze though when they only had 6mths "good" life and 3yrs max. Juke boxes could last 10yrs easy but they loose their shine and new technology makes them obsolete quickly, so avoid at all costs.

But just 3 machines returning $10/w each would annoy me no end.

Thommo

 

[Jacque]

Ah, passive income. Nirvana......

I looked into vending machines some time ago and even had an interview with the company re: how it all worked. It didn't take me long to realise that they're far from passive, as they require refilling on a regular basis (no holidays if running them yourself!) and some are mightily complicated to operate. You also need assistance siting them (if not already done as part of the deal) and there can be ongoing costs for this as well. Servicing is expensive and not straightforward, and overall I wasn't impressed.
Then again, there are obviously success stories on this forum, but just be aware of the pitfalls and downsides. I just think there are easier ways to make money

 

[NigelW]

Ah, passive income. Nirvana......

I looked into vending machines some time ago and even had an interview with the company re: how it all worked. It didn't take me long to realise that they're far from passive, as they require refilling on a regular basis (no holidays if running them yourself!) and some are mightily complicated to operate. You also need assistance siting them (if not already done as part of the deal) and there can be ongoing costs for this as well. Servicing is expensive and not straightforward, and overall I wasn't impressed.
Then again, there are obviously success stories on this forum, but just be aware of the pitfalls and downsides. I just think there are easier ways to make money

Like you I looked into it, but my analysis matched Jaq's. Also too difficult for an "industry outsider" to get the scale required to make decent $ as a sideline. not enough return for effort...but again just my 2.2c.

Cheers
N.