How does one purchase a rail car then lease it to a railroad company?

Question

How does one purchase a rail car then lease it to a railroad company?

Answer 1

Purchasing the car is easy.  I have been away from it for a while, but there used to be manufacturers like Pacific Car and Foundry, Evergreen Freight Car Corporation, and others.  Whether or not these particular companies are still in business I don't know.  All it takes is a contact and the cash.

I have only known, personally, one person who has done this, when he purchased a three bay hopper car in 1984 at a cost of $55,000.  I have no idea of the measures involved in leasing a car to a carrier, only that it can be done.

But, this is a risky business and not for the faint of heart.

The only way I could recommend this would be if one were to incorporate and then pay themselves a salary from the corporation.  This would insulate an individual, as well as personal finances, from the inevitable problems that can cost a boatload of $$$$$.

If your car breaks down out on line, you, as an individual, would be responsible for the cost of repairs, via the miracle of AAR billing.  If your car is responsible for a derailment, you could be responsible for damages easily reaching into millions, if not hundreds of millions of dollars.

Factor in insurance.  Heavy maintenance is in the form of COTS (cleaned, oiled, tested and stenciled), which is required every ten years, and costs some hefty cash.

If your intent is investment, I would recommend real estate or a put put golf course, since the "pet rock" cemetery has already been done.

Answer 2

You are looking at serious money, a rail car can cost upto £1million