Equipment: Rent or Buy
One of the greatest expenses for contractors is the cost of equipment. For some specialized jobs, a particular tool may only be needed once but it may be vital to the completion of the project. Other equipment is required for almost every job and will see much more wear and tear. With so many variables, when does it make financial sense to rent and when is it best to make an outright purchase?
How often will the equipment be used?
If the equipment is something that will be used frequently, it does not make much sense to rent it over and over. Eventually, the rental costs will exceed the initial purchase amount. If it is only needed for a single job and its use is atypical, renting could be a good option.
How difficult is the maintenance?
Repair and maintenance are often overlooked considerations. If maintenance is tedious or is not likely to be completed on a regular basis, the wear and tear on your investment could cause it to lose value prematurely over time. In such a case, renting when needed is an attractive option because it eliminates the need for maintenance.
What is the upfront cost of purchasing?
If the cost of purchasing is very close to the cost of renting the item, it may be best to go ahead and purchase the item, especially if you can foresee a situation where it may be needed again. If the cost of purchasing the equipment exceeds your current capital, renting may be the best solution until you can save up enough to make the purchase.
What is the job site access like?
If the site you are working at is very remote or difficult to access, the last thing you want is to have to leave in the middle of the project to return rented equipment. If access to the worksite is restricted for any reason, consider purchasing your equipment or renting for the entire length of the job.
How long is the equipment needed?
Renting for a long period of time can quickly increase the cost of a project. Remember that the unexpected can happen and it can result in needing a piece of equipment longer than initially planned. If the total expected rental cost is close to the price of purchasing outright, buying would be the best option.
There are many variables that can affect the decision of whether to rent or to buy. Asking the questions above and considering the answers together can assist in making an informed decision.