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Can someone help me with line of thinking??

Discussion in 'Business Fundamentals' started by LwnmwrMan22, Dec 28, 2007.

  1. LwnmwrMan22

    LwnmwrMan22 PlowSite Fanatic
    Messages: 28,378

    I had a shovel guy, paying him $30 / hour, including drive time, which is quite a bit, probably 60-80 miles for the whole route, including doubling back to check on the lots to make sure plow guys didn't leave the row along the sidewalk, etc.

    Anyways, that's beside the point.

    He's trying to start up a business selling a specific product to a specific client, which right away isn't a good thing.

    Plus, this specific product (high end golf course maintenance equipment) is a large amount of money, for a very specific use.

    Anyways, he tried it for a year, and is now bailing on the business, which isn't good either.

    Now he's got a 2007 Kubota 6040 (60 hp) 4 wheel drive, cab, heat, air, radio, turf tires, etc.

    I've got a 2002 Kubota 4330 and am looking to get a 60-70 hp tractor, mine's got about 2000 hours on it, and it's run out of depreciation, warranty, etc., plus just slightly under powered for what I use it for.

    Anyways, he's got it listed on different websites for $28,500, no loader.

    I call up my dealer and a loader plus bucket is going to run me about $6,000. I ask what is a new 6040 going to cost me, I'm told $30,000 +/- couple hundred, plus the cost of the loader, or $36,000.

    Soooo... I talk to my shovel guy, who at the end of Jan., is going to be moving out of state.

    I tell him that by the time I buy his tractor for $28,500 and pay interest on it for 3 years, it'll be more than if I buy a new one at $30,000 with 0% from Kubota for 3 years.

    It's going to run about $4500 for 3 years interest.

    Also, the tractor has about 250 hours on it, and is now a year old.

    I told him I'd give him $20,000 for it, but he said no, he was going to stick it out for a higher offer.

    What are your thoughts, and if you were in the market for such a piece of equipment, would you offer more??

    Again, if you finance for 3 years, it's going to be about $4000 in interest for total cost of the tractor. So, if you take the $4,000 of the price of a new one, you're at $26,000, just to make the deal even. If you take in the fact that it's a year old, and 250 hours (I realize 250 is nothing on a diesel engine, but it's still 250 hours) what would you offer the guy?
  2. highlander316

    highlander316 Senior Member
    Messages: 583

    against his price? I'd buy the new then for the reasons you stated, its a no-brainer. If I really wanted his, then maybe I'd offer 23-24.
  3. LwnmwrMan22

    LwnmwrMan22 PlowSite Fanatic
    Messages: 28,378

  4. AbsoluteH&L

    AbsoluteH&L Senior Member
    Messages: 573

    Sounds like you already have your self convinced. Guess your buying a NEW Kubota.:)
  5. LwnmwrMan22

    LwnmwrMan22 PlowSite Fanatic
    Messages: 28,378

    No, it's not that at all. I don't need a tractor, but if I could find a deal on one I'd upgrade mine.

    I don't understand his line of thinking, that he's asking $28k for his tractor???

    I know why, but still.....
  6. dforbes

    dforbes Senior Member
    Messages: 247

    can you get by till the end of January with what equiptment you have. I doubt that he will sell it at this price. If he is moving out of state he will probably be ready to unload it at your price by then.
  7. DirtyJerzey

    DirtyJerzey Senior Member
    Messages: 358

    i agree you already made up your mind lol. Does make more sense and then of course you forgot the golden rule youre getting something BRAND NEW. though at the same time dont you need to spend another 6k for the loader and bucket? so now youre at 40,000 for a new one compared 35,000. But now after i wrote that, its basically the same as youre saying without the loader. For the extra 5k I would just buy it all new, that way its all yours, warranty and everything is in your name.
  8. LwnmwrMan22

    LwnmwrMan22 PlowSite Fanatic
    Messages: 28,378

    No, the $36,000 is WITH the loader, $30,000 without the loader, for the new tractor.

    Either way, I need a loader, whether I put it on his, or a new one without the loader, which for the sake of this discussion, is a mute point.

    Also, with Kubota, the warranty will transfer over to my name. I believe it's a 3 year warranty, if I remember right.

    As for the question of whether I can wait until the end of January... yes, I could wait about another 2 years before I'd REALLY need to look for another tractor.
  9. DirtyJerzey

    DirtyJerzey Senior Member
    Messages: 358

    If he seems hard set, which i would assume he does on the price i would try and wait it out. My only concern would be if he does sell it before the end January and you need a new tractor youll either end up paying a good penny for a used one since the end of January is the worst of winter and prices are higher so you might end up with a new one anyway
  10. QuadPlower

    QuadPlower PlowSite.com Addict
    Messages: 1,056

    NEW = Same or less price, 0% interest, the full 3 year warranty, keep you dealier happy and they will take care of you.

    USED = 1 year warranty by the time you buy it. Pay interest to a bank (or the guy). Not really a good price deal.

    I would go NEW and pick out the perfect tractor you need when you need it.

    If he comes to you when he's moving and offers it to you, I would go even lower on your price. Not everyone considers the interest on a loan when buying used at a lower price. They just compair the base price with the new one and think they are getting a good deal, because it is cheapier.

    Good Luck
  11. StonewallFarms

    StonewallFarms Member
    Messages: 73

    I also agree that you have made up your mind with the NEW one.. Also on another line of thought, and i don't know what your situation is, but there is prob. a reason why he is your shovel guy, and not in your truck, not sure how he takes care of equipment,(for that reason i don't let some of my own employees touch mine) but why bother with something that someone has already worked with. Granted golf course work is not too hard on a machine, but still you never know who used it and how they used it.. Let us know how your make out
  12. LwnmwrMan22

    LwnmwrMan22 PlowSite Fanatic
    Messages: 28,378

    See, I think you're all missing my point.

    The reason he's my shovel guy and not in a truck, is because I don't have oodles of shovel work to do, so he's able to get around to all the different lots and check on what everyone's done, and then call me and give me a report, so I don't have to do it.

    He's more meticulous than I am.

    My point to this whole thread was, was that he's looking to get rid of the tractor, because he's no longer going to use it.

    I'm just trying to figure out how someone would buy his tractor for the reasons that I mentioned, the costs factors of buying the used one vs. the new one.

    If he's going to stick to his $28k +/- price, then absolutely, if I were to buy (don't need to) a tractor, then I'd go buy a new one, fiscally it doesn't work not to.

    If he'd drop his price down to where it made sense to fiscally purchase his, I'd have no problem buying his tractor.
  13. Mudman78

    Mudman78 Senior Member
    from NJ
    Messages: 103

    He went belly up because he couldn't make any money. He's selling the tractor for $28,500 because he doesn't want to take a huge hit on it (he already didn't make any money in the business). Don't worry about it. It's his tractor and if he wants $28,500 for it, that's his problem. If you want to help out a friend in need, then buy it from him at his asking price. If not, buy a new one at a better deal, but since you don't "NEED" another tractor, let it go. If he gets desperate, he'll come to YOU.

    KATTRANSPORT Senior Member
    Messages: 143

    I believe NEW equipment gets a full write off for year 1 or up to 25k atleast thats the way it is in PA. Where do you figure 4K in intrest? Must be a high rate. Im with you on this one. If he drops the price buy it otherwise pass. Never be in the market to BUY something be in the market to get a DEAL
  15. LwnmwrMan22

    LwnmwrMan22 PlowSite Fanatic
    Messages: 28,378

    Here's another thing my dad brought up...

    If he sells it to anyone other than someone quite local, it's going to cost $1000-2000 to pick it up, or have it transported.

    Again, more reason why most people would buy new at a dealer.

    I found one the last night in PA, exact same thing but already has the loader, for $26,000 and 152 hours.

    I'll wait for a month or so, or when he drops my equipment off again, and feel him out some more.....
  16. Gicon

    Gicon Senior Member
    from MA
    Messages: 989

    Lawnmower, you already have it all laid out. You have answered your own question....basically. Here is the rest of your answer:
    If you CANNOT purchase his 1 year old machine for $10,000 less than the cost of its equivalent machine BRAND NEW, than you do not purchase.
    If you cannot save atleast $10,000 than you buy a brand new machine. End of story?