1. Welcome to PlowSite. Notice a fresh look and new features? It’s now easier to share photos and videos, find popular topics fast, and enjoy expanded user profiles. If you have any questions, click HELP at the top or bottom of any page, or send an email to help@plowsite.com. We welcome your feedback.

    Dismiss Notice

Leasing equiptment

Discussion in 'Commercial Snow Removal' started by Bossman 92, Jul 19, 2007.

  1. Bossman 92

    Bossman 92 PlowSite.com Addict
    Messages: 1,770

    Does anyone here lease loaders or skid steers for snow removal? I am kicking around the idea of buying a skid steer for snow removal, but don't know if leasing would be better.

    Thanks Bossman
     
  2. grandview

    grandview PlowSite Fanatic
    Messages: 14,609

  3. Bossman 92

    Bossman 92 PlowSite.com Addict
    Messages: 1,770

    Thanks Grandview


    Bossman
     
  4. RLM

    RLM PlowSite.com Addict
    Messages: 1,270

    I looked into it (rental) when I bought my first Bobcat (2001). To rent the 753 with a blade they wanted $ 1200/mo, to buy was under $ 500/mo, with a 5-6 month season up here I just bought it. I traded that machine in on two older ones, it was in better than showroom condition after 3 seasons, 300 hrs, I only lost $1500+intrest, from what I paid. I bought 2001's a 873 & 773. Get the largest you can afford, it makes a huge difference.
     
  5. T-MAN

    T-MAN PlowSite.com Addict
    Messages: 1,363

    When looking at leasing versus buying you have to look at a couple things.
    1) Will the machine pay for itself each month ? So you lease for 1200 for 5 months, with snow/salting shoudnt be a problem. Buy for 1k a month and April rains like heck. Mud every were. Were will the 1k come from if you can not work the machine ? Hopefully you have a few bucks stashed for a rainy day. Do you know that you have work to justify the machine 12 months a year ? Be honest with yourself, alot of guys buy snow equipment with no accounts, then cant make the second payment. Will my non snow business generate an extra 1k profit with the machine ? 1K is a tuff nut to crack if the machine is not a true asset.

    2) Do I have safe/covered storage for the machine as well ? Will you be renting space to store the machine ? Thats another hole in the checkbook as well.

    Alot of times leasing to own is a better deal for company's with out deep pockets. Plus then it keeps your capital up, and if it all works out you can buy after your lease is up.
     
    Last edited: Jul 21, 2007
  6. bribrius

    bribrius PlowSite.com Addict
    Messages: 1,609

    generally speaking i would say save money and pay cash. If your not paying interest that is less money the equipment has to make to pay itself. old school. if you have to lease or take long term payments the answer to the question is you probably cant afford it. will the equipment pay for itself? even if does today it may not tomorrow. that goes if its a purchase or a lease. if you can somewhat afford it you will be on short term payments to own.that is at least a little less risky since you will more than likley have equity for quick resale. as far as leasing being for companies short of funds, i really dont see that side of the situation at all. i know larger companies lease fifty vehicles at a time to avoid costs associated with maintainance and hiring employees to maintain them. primarily larger business that do there own trucking which are primarily distribution or sales businessess. smaller companies seem to do better buying less expensive equipment that they actually purchase (preferably in whole) or subcontracting work on jobs they dont have equipment for. you can stop using a sub. you cant just stop a lease or purchase agreement when your broke or dont have the need any longer. on another note. if you show a bank your balance sheet on your company and are applying for a loan they tend to dislike it that your company has no actual assets because everything is leased. they also tend to not like it if your company has huge monthly expenses associated with everything being on a purchase payment plan. (i know this from personal experience when i was looking into buying warehouse space years back)

    only way i would think a small company would be better off leasing is if they plan a quick trade in on the equipment. since in that case the lease expense may be equal to the depreciation of the equipment from its retail value and trade in/resale value. which if they were smart they would have bought used and not at retail to begin with. JMHO
     
  7. bltp203

    bltp203 Senior Member
    Messages: 484

    I just see less risk with leasing.

    Lets say you get that great contract for a large lot. Do you take a chance by purchasing what you need ( for example a skidsteer with a pusher) and then risk not getting the contract again next year. Or do you lease and if you lose the account, then oh well......

    What about this.......subcontracting to someone with the equipment.

    I see this the best alternative. Because even on a lease, what happens if you get little to no snow.......you still gotta pay. With a subcontractor, you only pay when the machine is in use.

    Now, I am talking about those who use a skidsteer in the winter only.....not those who can make use of it during the landscaping season.
     
  8. Bossman 92

    Bossman 92 PlowSite.com Addict
    Messages: 1,770

    Hey great replys guys, keep them coming!

    I am looking at buying a good used skid steer, in the price range of 10 to 12k. I have enough money saved to put down half, and only have one other truck payment, everything else is paid for. Also I could use the machine in the summer months also. I dont have enough work for it everyday in the summer, but once or twice a month. I have a place to store it so that isn't a prolbem either.

    Now what do you think, rent or lease?
     
  9. basher

    basher PlowSite Fanatic
    from 19707
    Messages: 8,992

    Leasing and renting are the same, a lease is just a long term rental. If you rent or lease you get 100% write off but you'll never see any of the money again.
    If you have the money to purchase and make payments you will be building equity. If you buy it right you should be able to sell it and recover most the expense. I've found if I need a piece of equipment for more then 30 days I can buy a late model used piece, sometimes a lease turn in, then sell it when I'm finished, often for the same price I paid. I've occasionally made money in the process. Then I'll take a deprecation credit on my taxes. Talk to your accountant before you make a decision.
     
  10. bribrius

    bribrius PlowSite.com Addict
    Messages: 1,609

    take a guess here. 12000 purchase price + 600 (5% sales tax) = 12600 downpayment 6000 balance on note 6600 at 8% note rate (unless you find better) term of 24 months/two years payment per month 298.50. final payment 298.53. total interest paid 564.03.

    this does not account for depreciation on tax credit or maintanance expense or insurance. i would assume the depreciation credit would be a lot more than maint. costs and insurance even when taken over a five year period. i have never owned a skid steer though. for such a small owed amount you could probably pay this off in much less than two years. maybe one season. with plenty of equity from the beginning. sounds like a purchase to me. if you could pay double payments ( use of two days a month three hundred profit per day double payments are feasible) 597 per month for 11 months final payment of 312.20. total interest paid 279.20. just a guideline because of unknowns might help you a little.
    let us know what you decide.
     
  11. T-MAN

    T-MAN PlowSite.com Addict
    Messages: 1,363

    Honestly 10-12K wont get you a whole lot of skid loader these days.
    Especially something needed for snow work. Machines at those prices usually are high hours or beat pretty bad. Remember new paint dont mean ****.
    If you have good hydraulic skills and mechanical appttiude then you might be okay. Other wise shop time and parts may nickle and dime you to death. Skid parts are not cheap, and some manufactures dont have good support (meaning you may wait 2 weeks for parts). Its a crap shoot.
    If I were you I would try to save a few more bucks and buy this fall. Look in the low 20K or high teens. You should be able to find something very nice that is not used up. 3500 hour skid loaders usually need major work. 3500 hour tractors are just broke in.
     
  12. clive

    clive Junior Member
    from Rockies
    Messages: 19

    Leasing in the way to go. Check out Balboa Capital or GE Capital for leasing programs that can be tailored around your cash flow.