Equipment-leasing investment programs, or ELIPs, are available through some brokers or other advisors. Investors provide capital to purchase major items (commercial aircraft, marine vessels, railcars) that are then rented to a third party. Companies that lease the equipment pay rent for a specified period and then either purchase the gear outright, re-lease it, or return it to the lessor for resale.
Investors receive monthly income and a payout when the program liquidates. ELIPs have become very attractive in recent years as interest rates and bond yields have plummeted. Today, investors can expect to receive around 7 percent in cash flow, plus some payout at the end of the deal, in about six years.
There are risks in these deals: you might wind up holding onto expensive equipment no one wants to lease or buy. To reduce those risks, investors should look for a program run by an experienced manager such as ICON Capital, ATEL Capital, or Cypress Capital.
