When it comes to construction equipment, you can ask yourself this question. Should I buy or rent? Conventional wisdom may make you believe owning construction equipment is far better than renting.
Besides, the monthly cost of renting is around 3-5 times more than buying it. Plus, in the end, you will not have any assets to show.
When to Purchase Construction Equipment
Renting a construction machine is suitable for most businesses, especially when factors like storage costs, depreciating value, and upfront costs are involved. But sometimes buying is better than renting.
For instance, if you use the equipment regularly, you must consider buying it. The rule of thumb is that if you use equipment more than 67% of the time, you must purchase it.
For an excavating company in the construction industry, visiting https://www.ablesales.com.au to buy equipment will be viable. Other instances necessitating buying construction equipment include when a specialized construction machine is required and when handling complex and long-term projects.
Pros
- Always available
- You can put it on sale
- Payments might be lower
- It is familiar
Cons
- You might require a backup
- The initial cost is high
- You might have to payment a down payment
When to Rent Construction Equipment
Construction projects need specialized heavy machines. Renting one enables you to access construction machinery without paying monthly leasing payments, loan payments, or significant upfront costs. Instead, you will rent construction equipment for days, weeks, or even months.
Pros
- You can test the technology before using it
- It is a short-term investment or commitment
- You will enjoy the flexibility
- Eliminate maintenance and repair costs
Cons
- No customization
- Competition for availability
- Costs are high in the long run
3 Key Factors to Help You Make the Right Decision
1. Maintenance and Service
The company will deal with the maintenance and service when you rent construction equipment. You will only concentrate on getting your projects done.
On the other hand, buying equipment means you will have to deal with maintenance and service. However, if your business has a servicing and maintenance team, then this will be cost-effective as everything is done in-house.
2. Utilization Rate
How often you use construction equipment will help you evaluate whether to buy or rent. Other factors will come into play, but if you use a particular piece of equipment most of the time, it would be better to buy it. Although the nature of projects can change, you may calculate utilization rate based on projected tasks and recent use.
3. Equipment Type
You should rethink if there is a specific project that your business handles completely. Although rental companies often provide a range of customized equipment by offering accessories and attachments you require to get the job done; it can be expensive in the long run.
So, if you have a particular equipment, like a water container or tank, you must explore buying options. This way, you will always have the equipment available at the job site.
In conclusion, explore renting options if you have short-term projects. However, if your projects last a year or so, it would be best to buy construction equipment. This way, you will have machines on-site and save money in the long run.
