Construction sites normally require an extensive range of materials and equipment for excavating, loading, trenching, lifting, digging, filtering and storing. This is where the decision to buy or rent construction equipment comes in. The decision will make an impact on the project management, speed and quality of the operations and your budget.
The choice may vary from one business to another. One company may benefit more by renting a scaffolding and another may save more time by buying one for themselves.
But there are many factors to consider before you decide whether you should rent or buy your equipment. These factors are:
- The cost of renting vs. buying
- Your project’s budget
- Availability of resources and expertise to manage the fleet and inventory
- Duration for which the rented or owned equipment will be used
Do all these factors sound too technical? We break down what you need to consider.
Analyze Your Construction Equipment Needs
A general rule of thumb in the construction industry is that if you don’t use a piece of equipment more than 70 percent of the time, consider renting. However, if you use equipment more than 70 percent of the time, consider leasing or purchasing the equipment. So step back and think of your future needs. If renting equipment will cost you more than owning it, buying might be a better option.
Another consideration is the immediate need for equipment. Will there be significant cost consequences if you don’t have a piece of equipment on hand? For instance, would your trucks be unable to perform field repairs without generator or welding power? Will it disturb your schedule? If your business uses a piece of equipment for different jobs, it’s better to buy.
Consider Capital Expenditures/Tax Incentives
There are also bookkeeping and financial factors to consider. If you rent, your expenses will be billed back to you or deducted annually. On the other hand, if you buy equipment, you must treat it as a capital expense during tax season. You cannot deduct the purchased equipment’s expense during the year when you purchased it. Instead, the costs will be depreciated or amortized over the equipment’s life.
Weigh Transportation Costs
Many contractors often overlook the transportation costs, which is part of the total cost of equipment management. For example, if the project is based in St. Louis and you bid on a piece of equipment in Chicago, consider the cost of transporting equipment 300 miles. Think about the following: the cost of the driver, the truck, loading and unloading time and the fuel. Also, you’ll need people to fuel and maintain the equipment.
Examine Interest Rates
Equipment dealers and manufacturers work together to provide business owners with financing plans to entice them to buy equipment. Many manufacturers and dealers also offer zero-percent financing on percent financing over the equipment of certain sizes. You should buy steel and metals enterprise from here.
When Should You Rent or Buy Construction Equipment?
Now that you know the factors to consider, it’s time to think about the benefits of renting or buying construction equipment.
Why Rent Construction Equipment
Larger companies can decrease or increase their fleet as needed. On the other hand, small- to mid-size businesses can rent specialized equipment at lower costs. But there are many benefits that come with renting a piece of equipment.
- Avoid operational expenses. If you buy the equipment, hydraulics, parts and fluids must be changed regularly. If you rent, a rental service provider will do all these things for you. You can buy the galvanized sheet metal and just rent the equipment needed to shape the galvanized sheet metal.
- Save the up-front investment. Heavy equipment such as excavators and earthmovers can take up a lot of your money unless you sell them. Even if you sell the equipment, you might not get the price you want. Save yourself from this hassle by renting the equipment instead.
- Free up the cost of transportation and storage. When you rent construction equipment, the service provider will pick up and deliver the equipment on demand. You don’t have to worry about where to store it either.
Why Buy Construction Equipment
As mentioned above, you should buy the equipment if you need it for more than 70 percent of the project’s duration. Other factors to consider when buying equipment are:
- Save money by purchasing secondhand equipment. You don’t have to buy new equipment all the time. Rental companies offer secondhand equipment for sale that you can get at affordable prices.
- Equipment is available whenever you need it. When you buy equipment, you don’t have to worry about not having the right equipment at the right time.
Whether you buy or rent the equipment, it’s important to consider your budget, needs and more to ensure that you get the best out of your money.