Dumpster Deal

If you’ve followed me on Twitter you may have noticed I have been talking dumpsters.

I am now in the roll-off dumpster business.

One of my car wash employees mentioned he hated banks. I asked why. He said he’s trying to finance a some dumpsters he could use in his business and rent to others.

He has a business cleaning out old houses, barns, and businesses. His clients are usually real estate agents prepping for sale or banks foreclosing on properties. He comes in and gets it ready to sell. He fills in for us on the car washes and cleans out our pits.

So when he mentioned he needs financing, my ears perked up.

His plan, buy:

3EA 18yd bins (avg. $250/wk)
1EA 25yd bin (avg. $340/wk)
1EA 30yd bin (avg. $380/wk)
Trailer to haul them (he has the truck already)

All-in with taxes/title: $52k

We settled on a 4-year term at ~12%, but rounded it off to $1300 a month. If he gets 75% utilization of his assets he will have paid them off by the 10th or so of the month and after fuel costs and maintenance on the truck, the rest is his to keep. The customers pay tip/dump fees.

So I’ll own the equipment in my name and he’ll handle everything else, including adding me to his insurance as named insured, and our contract includes indemnity for me.

I did not want the hassle of starting a new LLC and bank account, so this is under a sole proprietorship.

Now I’ll get to bonus depreciate the bins and trailer at 80%, so my write-off will be: $52,000 x.80 - ($1300×6 the rental income for the rest of the year) = ~$34k tax writeoff.

At my tax rate of ~30%, I’ll save ~$10k in taxes. So year 1 return would be (6×$1300 + $10k)/52k = 34%. Not bad.

Since I plan to buy another car wash or two, I probably would not have had a tax liability anyway. But this will give me some to roll-over to next year likely.

And, maybe more importantly, I’m helping a hungry entrepreneur get started. And I have downside protection with hard assets.

I told him if he can hustle and make this thing hum we can look at other dumpster companies in our area.

You know what that means y’all… ROLL-OFF ROLL-UP.

But let’s not get ahead of ourselves. This was a fun deal and gets my foot into a new asset-heavy industry - which is my focus for bonus depreciation.

What would you have done differently?

Kriss the Car Wash Guy

PS: What do the ultra wealthy know that we don’t about building, preserving and passing on TRUE wealth? There are three things that are never talked about.

No - it’s NOT multiple streams of income. Everyone knows that. I break them down in my new video at TaxFreeCashCow.com