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Leasing Shipping Containers


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We do not post about any investment unless we have had personal experience with it ourselves. We’d like to share with you a little known strategy that was previously only available to the big players like the very wealthy or well established investment firms but now has opened up to the rest of us.

Late last year a colleague of ours mentioned an interesting relationship he had formed with an international company that manages the leasing of shipping containers globally. As we were not familiar with this type of investment we were naturally cautious. However, always looking for new opportunities, we started doing some research.

The company offers the opportunity to manage the buying of shipping containers and then lease them to the shipping industry to use in their normal exports and imports of goods. A simple business model we could relate to. We compared this back to leasing property however with container leasing there are no maintenance or insurance to worry about and it is a much smaller starting investment.

With any new opportunity it’s important to research it thoroughly and decide if it matches your risk profile. Here are some things we looked into through our own due diligence.

In late 2008, the markets took a hit with the beginning of the GFC. At this time, to limit their losses investors and financial institutions pulled out of their profitable investments in order to cover the sizable losses sustained in other markets. The shipping industry was one of these investments.
This left asset management companies, looking for new investors for their low-risk, high-yield investment opportunities.

Containers facilitate approximately 90% of the worlds trade so there’s no problem with demand.
The company has a long and solid history managing the leases of over $400,000 containers.
We can call or email the company whenever we want.
The containers are yours.
It is registered just like a car with a number plate.
It is registered in the name you choose.
The containers are trackable so you can see where they are at anytime.
There is no time restrictive contracts – you can leave the company whenever you like.
Insurance is paid by the companies that lease them.
If you stay with the leasing company for 3 years or more they will buy your containers at the price you paid for them so there is no depreciating asset.
If you lease your containers for less than three years, the company will buy them at market price.
The company is always available and regularly keeps us informed of industry news.
If you buy 5 containers you will be paid monthly.

Changes in demand. (Considering the industry this didn’t seem to be a big risk to us)
Currency risks related to the market. Currency risk applies when your currency devalues against the US Dollar, thus making your principal investment more costly and inversely if the US Dollar has devalued when you sell. (However, as the asset has already been purchased, as the currency devalues against the US dollar our asset is becoming more valuable.)
When the industry opened themselves up to individual investors they became exposed to terms such as ponzi and red-alert investment. This was due to a lack of industry knowledge and common information surrounding this type of investment. A simple google search did bring up the idea that it might be a scam. However, by all accounts these posts came from people who were not investing with the company in question. There are also many posts of people who are investing and have nothing but good reports to say. We also took our questions directly to the company for their response and were satisfied they had answered them.

We decided in late 2013 to take the plunge and we have not looked back. With this in mind we thought it was about time to right our own post detailing our own experience and research for others who may also be considering shipping container leasing.

How it all works: They have 2 options. First has a guaranteed return and the second is a maximised rental agreement.

Option 1.
The containers are leased under long term contracts that provide a guaranteed income.
As these rental agreements are secure they can provide a guaranteed container lease return of 12%.

Option 2.
The containers are rented on a short term basis to cargo transporters in urgent need of them. Due to massive demand, restricted supply and need to deliver their cargos, these rental contracts demand a higher rental. These rental agreements over the last 10 years have averaged a return of 24%pa.  This is the option we took are averaging 22%pa at this time.

It is your choice as to which option you go for.

If you are interested in talking more about leasing shipping containers feel free to email me directly and I will be happy to discuss further.

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