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Construction Equipment: Should You Buy or Rent?

Posted by Shawn McCadden on Mon, Mar 16,2015 @ 06:00 AM

Construction Equipment: Should You Buy or Rent?

Buyorrent-wrThe decision to rent or buy equipment for construction work depends on different factors for each business, according to Peter Gregory, Wells Fargo Construction Group Equipment Finance VP. He says that while renting is often a more attractive option in a tough economy when construction activity has slowed down, companies that need and use construction equipment regularly must decide how buying affects their bottom line.


Advantages of Buying

The advantages of buying the equipment your company needs to perform revenue-generating work include:

  • contractor rental informationimmediate ownership
  • deductions for depreciation
  • interest to save on taxes
  • onsite availability of equipment when work needs to be done

Note that deductions for depreciation are just one tax aspect of buying equipment, and any businesses subject to the Alternative Minimum Tax experience depreciation as a penalty, not a credit.

Thomas Westerkamp of says it makes sense to buy equipment that is just as expensive to rent as to buy, as well as equipment needed immediately in emergency situations to prevent loss or damage, or danger to health and safety, such as emergency generators and portable coolers.

Advantages of Renting

Equipment such as a scissor lift that might be used on a rare occasion would be wise to rent, allowing you to reallocate money towards buying equipment used more often on job sites. This way, the cost of maintenance is eliminated while the use of the equipment is still available. Renting is also advised when trying out new equipment and deciding if it's versatile, useful, and efficient for owning in the future.

How to Decide

One alternative to consider is to purchase quality used equipment which can bring the purchase price down from a new unit, while still providing the same capabilities and convenience of owning. But in this case, buyers beware! Check all safety equipment with the purchase, inspect it closely, and check all manuals and accessories to ensure it's in good condition for your purpose.

Other considerations when deciding to rent or buy include:

Deciding to rent or buy construction equipment

  • Was the unit previously used as a rental?
  • What are all the costs, initial and ongoing, of the rental or purchase?
  • What agreements or contracts are part of the deal (purchase or rental) and what is included in them as far as dealer references, equipment demonstration, operator training, and terms of use and return?
  • If you buy, will it eventually pay for itself when you consider the time saved and renting fees?
  • Does the machine show signs of having been repaired? If so, what is the quality of the repair?

The decision about buying or renting really depends on unique business factors at individual companies. Mid Country Machinery owner Lucas Peed advises that the decision to buy or rent has a lot to do with the type of contractor business. He says local contractors are more likely to buy equipment to get the tax breaks and equity, while general contractors who travel a lot are more likely to rent equipment rather than haul it out of state for jobs, which adds to the cost of operation and ownership. Discuss your potential investment with your accountant and be thoughtful of the longevity of your potential purchase. If it will be an asset to your business for years to come, continue to bring new business, and improve the efficiency of your work, it is a wise investment.


Heidi CardenasGuest Blogger: Heidi Cardenas is a freelance writer with a background in human resources, business administration, technical writing and corporate communications. She specializes in human resources, business and personal finance, small-business advice and home improvement. She enjoys creating informational content for clients including blog posts, articles, white papers, case studies, and talking points, as well as business documents such as sales letters, business plans and strategic plans.



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