The question of whether to buy or rent heavy equipment for your fleet can be a tough one, especially for smaller construction companies. The most significant and most obvious difference between the two options is in the immediate cost. Sometimes, the decision is made by this consideration alone.
But, while purchasing requires a bigger upfront payment, it’s often cheaper in the long run. Rental costs add up, and you don’t have anything to sell later down the road to get some return on the investment. Of course, owning also comes with ongoing costs that you don’t have with rented machinery.
Here we’ve outlined some of the major factors and questions that can help you figure out whether you should buy or rent heavy equipment when you need a specific machine for a job.
Deciding Whether to Buy or Rent Construction Machinery
- Do you have the capital to buy heavy equipment outright? If so, buying may be best, but renting provides a more budget-friendly option for the moment.
- Do you need the machine for just one job, or will you need it again in the future? Do you need it for a long project, or just a relatively quick job? If it’s frequently needed equipment, it typically makes more sense to purchase it for your fleet.
- As a general rule of thumb, many industry experts recommend buying machines if they’ll be in use at least 60% of the time, and renting otherwise.
- Are you looking at a specialized piece of construction machinery? If so, it’s generally smarter to rent it, as you’re unlikely to have additional uses for it. Unless, of course, it’s relevant to a project niche for your business.
- Is the equipment versatile? Standard fleet inclusions like excavators, loaders, forklifts, compactors, graders, compactors, and articulated trucks are usually sound purchase investments.
- Do you have the capacity and funds to transport, store, insure, and keep up with preventive maintenance on the equipment on a permanent basis? If not, renting is a convenient answer to your current needs.
- Keep an eye on how often you’re renting particular pieces of equipment. It adds up over time, but you don’t end up owning anything after all the cash outlay. If you’re renting the same machine repeatedly, look at purchasing it.
- Do you need constant flexibility to take on jobs with short notice or to deal with frequently changing job plans? Owning equipment leaves you better positioned to act quickly and roll with changing site conditions or plans. However, with a well-stocked, highly responsive rental company (like Trekker!), this doesn’t have to be an issue to put you off renting.
- Are you planning to grow by taking on bigger projects, more projects, or both? Or will you be taking similarly sized jobs at about the same pace for the foreseeable future? If it’s the former, buying may make more sense; if it’s the latter, renting on an as-needed basis may be right for you.
- Talk to your company’s accountant or financial advisor about how both buying and renting affect your tax situation. You may discover that there are deductions, credits, or exemptions that strengthen the case for one or the other.
- Rentals and leases are not classified as long-term debt or liability, which can make financing easier to obtain in the future.
- Ownership allows you to sell machines or trade them in when it’s time to upgrade your fleet, as an additional long-term financial incentive.
- If you prioritize always having the latest models and most up-to-date technology, renting makes this much more practical.
- Owning allows your operators to master the machines they regularly use, while renting may require them to be trained for new makes and models more often. This can have implications for your productivity and operating costs.
- Sometimes, you might consider renting and buying. Renting a piece of heavy equipment and putting it to work at a job site can be a great way to test it out in real-world conditions prior to buying your own. Check out its performance and talk to the operators who use it to get their feedback.