asset leasing as an alternate investment
it’s hard to imagine how to make money from assets that lie around appreciating in value painfully slowly. and devising a strategy so you can make money from passive income is harder still.
but steadily, it has become popular for those who have a lot of liquidity. some high net worth individuals (HNIs) have used asset leasing as a form of investment.
for the longest time, the easiest answer to asset leasing has been renting real estate. there is precedence and people have been doing it for ages. but it’s now time to stretch your imagination when it comes to putting your assets to work.
electronics, furniture and automobiles have all found takers in the market. people, for example, are happy to pay to get access to white goods such as refrigerators, microwaves, and even washing machines. startups that rent furniture to customers, also lease furniture from people who have, say, a sofa set lying around.
the physical assets leased by different businesses payout rent at constant intervals. such assets can be pooled together to form a portfolio.
but this is not the only way you can lease assets. just like fractional ownership of real estate, these assets can also be bought by a consortium. now, this consortium has higher purchasing power and can also make deals with companies who can lease these assets. investors can invest in such lease agreements individually or as a part of a pool and earn income in fixed intervals. it could be monthly or quarterly, depending on terms of agreement.
these assets yield very modest returns.
investing in mutual funds and directly in the equity market has become really popular in India, but these asset classes can be volatile. on the other hand, such leases are usually taken by businesses with strong balance sheets. and while there is a risk of default on payment of lease, the physical assets act as collateral themselves.
but another risk with such equipment as collateral is that these are depreciating in nature and hence, in the event of a default, these collaterals might not fetch enough value for its investors.