Passive Income Report :: March 2007

by Brian Lee. (Visited 2980 times) (15 comments) :: Print This Post
Posted: April 17th, 2007 under Income Reports, Passive Income.

I started to get serious about passive income a couple of years ago when I was introduced to the game Cashflow 101.

I played the game over and over until I internalized a new way of looking at creating income. To this day, it’s my favorite board game and some of the best money I’ve ever spent.

In March, I made $898.98 from four different passive income sources. This money is in addition to the income I make in my trade as a film producer. Read A Roadmap From Debt to Living Your Passion for my full strategy.

Some of my sources are more passive than others (as explained in How Passive is Your Income), but each source has a strong residual component.

Here are the four income streams in order of most income earned:

$700.30 - Bulk Candy Vending
$ 96.67 - Blogging
$ 55.83 - Automated eBay Business
$ 46.18 - Network Marketing
$ 0 - Rental Property

passive income

There is a detailed article breaking down all of these sources on Five Ways to Create Passive Income With Little or No Money.

Bulk Candy Vending - $700.30

My vending business has always been my most reliable source of passive income. I call it passive because it only takes two easy days a month to drive around and pick up my money.

I have a few unplaced machines in my kitchen for which I need to find homes. After they’re placed, I don’t have any desire to expand further. My intention when starting this business was to create passive income, not to create a part-time job.

You can read about the mechanics of my business in How to Start a Bulk Candy Vending Business for Passive Income.

In March, I had 33 active locations in two cities: Los Angeles and Austin, TX. The average income per location was $21.22, which is a 72% profit margin when accounting for the cost of candy.

Blogging - $96.67

Blogging is definitely the least passive of all my income streams, but unlike candy vending, it increases each month while the workload remains the same.

Plus, I really enjoy it, so it’s hard to call it ‘work’.

Read the March Monetization Report for complete breakdown of my blogging income.

Automated eBay Business - $55.83

The newest addition to my income streams is an automated eBay business. I found some products at wholesale that I can easily replace and set up some auctions. Since I set up the initial auctions, everything has been automatic. eBay re-lists them for me whenever one sells.

I hired my Mom to do the packing and shipping, so I can concentrate on building other income streams.

Network Marketing - $46.18

My most passive income source for March was network marketing. I earned $46.28 for work I did over six months ago. I haven’t paid attention to the business lately because I have been devoting most of my time to the other three businesses, but I’d like to get back to it as soon as the dust settles.

Rental Property - $0

I have one rental property in Austin that basically breaks even in terms of cashflow. I mention it because it’s making me money in less tangible ways. Every month, the tenants pay down my mortgage a little and the property gains in value. Also, the rental market in Austin is tightening and I’ll soon be able to demand more for rent.

Conclusion

All in all, I’m pretty happy with almost $1000 in passive income. In the board game Cashflow 101, the object is to collect enough passive income to cover your expenses. In my real-life game, I’m well on my way!

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Genius Comments

Comment from Jeremy SasserCollins
Time: April 18, 2007, 10:52 am

The vending machine business has always intrigued me when someone calls it a passive income source. I understand that you set it up and place the product and that you are not there to necessarily take the orders, but as you indicated, this could turn into a part-time job.
I would be curious to know how much you make per time spent. It seems as though it is a time-intensive revenue of “passive income”. But I would be curious to your findings as to how much time you spend collecting the coins, filling the machine, cleaning the machine, maintenance, transport (you did say you have two businesses, one in Texas and one in California?) and with all the time involved is it really worth it?

It is great to see you branching out into some of the more emerging realms of passive income: such as blogging, eBay and also utilizing more tradition sources as well such as real estate (though you do not show any passive income yet) and network marketing.

I have found that hedged Forex trading provides a fantastic return for the time allotted (about 15 minutes a week), also paid advertising programs offer website owners a double whammy by promoting their site/blog and getting paid to do so. Progressive real estate bulk deals offer a new and very exciting passive income source where your principal is not at risk though the investment continues to grow with appreciation. Private corporate pools are also offering a great return if you know where to find them.

I will be looking for your time vs income analysis, please let us know.

Sincerely,
Jeremy S.Collins
http://www.selfwealthmanagement.com

Comment from Brian Lee
Time: April 18, 2007, 11:36 am

You’re right, it’s not a completely passive income source. Like all forms of passive income, there is an active and passive component. Vending tends to have a larger active and smaller passive component.

Check out How Passive is Your Income for a full explanation of my stance on the term “Passive” as it pertains to income.

That being said, I probably spend ten hours a month on my business, which means I make about $70 an hour. At this point in my life, I consider $70 an hour passive because I don’t have any other sources that pay that much for driving around, thinking, and listening to the radio. I actually look forward to my vending days because it’s relaxing.

While I enjoy ten hours a month of driving around, I’m not interested in much more. That’s why I’m capping my locations at about 50.

I’m also making adjustments that will improve my per-machine return and decrease the frequency with which I need to service them.

Once my other income sources pass up vending, there will be a point when I phase it out or sell the business because relativistically speaking, it won’t be passive to me any more.

Thanks for your input Jeremy!

Comment from Joe
Time: April 18, 2007, 5:54 pm

Hey Brian, it seems like the hardest thing about vending is actually locating the machines. Do you have any tips on that, or good methods/approaches to use? I liked your article about starting the business, but I am reluctant to use the charity approach. Is locating just a numbers game?

Comment from Brian Lee
Time: April 18, 2007, 6:07 pm

Yes, the hardest part is getting the locations, but it gets much easier after that.

Getting locations is all about sales. Most people hate sales, but then again, most people aren’t rich.

Just walk confidently into a place and ask to speak to the store manager. Find the decision maker and ask without apology.

Realize that many places WANT a vending machine. Their employees want a snack now and then, and they can keep kids busy.

I like to approach large clothing stores with college-aged employees. That seems to be a sweet spot for me. I ask to put it in their break room.

Since it doesn’t compete with their customers, why wouldn’t a manger want to do something that their employees want if it’s free?

When I am approaching people for back-of-the house stuff like breakrooms, I don’t use a charity or offer commission. When you are working on front-of-the house stuff, you need more leverage. Front-of-the-house locations yield more money, but are much harder to get.

Comment from Joe
Time: April 18, 2007, 6:30 pm

Cool, thanks for the response. On another topic, I found a cool how-to site that you might be interested in.
http://makeinternettv.org/

Comment from Brian Lee
Time: April 18, 2007, 7:29 pm

Joe, thanks for that link… I checked it out and it has some great resources on it.

Comment from DaveM
Time: April 19, 2007, 5:45 am

Great post Brian! It sounds like the vending income is getting better. I’m also intrigued by the eBay stuff you’re doing.

I love selling via online auctions, but I’ve always just been in “garage sale” mode. I’d be curious to hear how you happened to decide on the wholesale products you’re selling. That seems to be the hardest part of selling on eBay — figuring out what to sell.

Comment from Joe
Time: April 19, 2007, 6:42 pm

Hey Brian, what do you think of the Selectivend three-compartment machine at Sam’s Club? Which brand of vending machine do you use/like best?

Comment from Brian Lee
Time: April 19, 2007, 8:29 pm

I have bought a few machines from Sams Club, but they were Saega, not Selectivend. I was happy with the price and quality of the Saegas, and I would tend to trust Sam’s Club in general.

I’ve bought most of my machines on eBay. You can usually get brand new machines for $120 to $150 a piece. I have bought Amerivend in the past, but I haven’t seen them around for awhile. There is a company XYZ Vending that advertises a lot on eBay, and looks similar, but I cannot vouch for the quality.

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Time: April 22, 2007, 4:27 am

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Time: April 22, 2007, 11:05 am

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Comment from Alan
Time: April 24, 2007, 7:58 pm

Do you need a permit to have the vending machine business?. Just wondering

Comment from DaveM
Time: April 25, 2007, 5:40 am

Hi Alan:

Speaking from 8+ years in the vending business, you need to have the same permits as you’d need for any other type of business. If you’re not doing business under your own name, then you will probably need to file for a DBA “Doing Business As” and maybe a federal ID number.

You’ll also most likely need a vendors license so you can collect sales tax. Yes, there is sales tax on a gumball, but not candy. You just have to back into the cost of a gumball to figure out which portion is the tax you have to pay. Basically, here’s how you would do it:

Let’s assume your local sales tax rate is 6.25%…

Take your gross and divide by 1.0625. That will equate your actual total sales. Subtract that from your gross, and the remainder would be the sales tax you owe to your state.

Other than all that, make sure you have a good business liability policy to protect yourself in case someone chokes on gum/candy, or pulls a machine over on top of themselves and gets hurt. We carry a $1 million umbrella policy on our vending business. And we label each machine clearly with a “DANGER” sticker about moving or tipping the machine. It’s the society we live in!

As always, check with your own state and local government for any special requirements in your area. Your local Chamber of Commerce might be a great place to start asking questions.

Passive Income Report :: March 2007

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