Should You Buy Your Own Equipment for Your Property Development?
Depending on what type of property investment you delve into, you may be faced with a common dilemma – should you buy your own equipment?
When you renovate or build to sell, for example, you may need to dig, haul and landscape on your property. This almost always involves the hiring of equipment or specialised companies.
If you are the hands-on type that prefers to do the work yourself, you will still end up paying top dollar to rent the machinery for the job.
If you prefer to have the work done for you, it will cost significantly more to get it done.
Should you buy your own equipment? Here are 2 factors to look at…
Degree and frequency
The decision to buy equipment will come down to how much you intend to use it and how many uses it has.
An excavator, for example, can assist with various construction tasks and if you intend to continue on a path of building or flipping real estate, the savings could be worth it to you in the long run.
A small bobcat has a ton of uses when it comes to building and landscaping and owning one could make your work life much easier.
Is it in your budget?
Owning capital is almost always ideal – but it is not always in the realm of possibility. It is important to do a realistic check on your finances to see how long it will take you to earn back the cost of buying the machine.
Running costs and future value should also be in your consideration for buying – what seems like a good idea now may not turn out that way on your bank account.
However, also keep in mind that once you own equipment, you can then rent it out to other contractors and companies to make up for some of the payments and costs.
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For large plant unless you are in the business and can keep it working then I believe you can invest your money more efficiently elsewhere.
When you have money tied up in plant it is not earning you anything unless it is working. Small plant hand tools and the like may be a different proposition if it means you can get the job done on time without having to wait for tradespeople.
I don’t regard equipment as a capital investment it is a capital cost, almost all equipment looses value over time so if it is not making you money and more that what you loose in depreciation, interest (either on repayments or what the capital would return if invested) and inflation your money is better used somewhere else.
I did contract harvesting using my own header. The temptation was always to do contract work before harvesting my own crops which in part defeated the reason for owning my own header. You are pressured to make the repayments or earn the most you can from the equipment rather than use it for the reason you originally purchased the equipment which in my case was to harvest the crop and not have to wait for contractors.
It all comes down to what you want to do, if it is be a plant contractor or run an excavation business then go ahead and buy the equipment but if it is to be a developer or manage investments then leave the equipment to those that have that as their business.
I think it would depend on your storage capactiy and the size of the equipment. I am happy with my nail gun and compound mitre saw, but a bob cat I think I would have to be very hands on with the renovation journey! Perhaps in a year or so?!
[quote=Emma 7]I think it would depend on your storage capactiy and the size of the equipment. I am happy with my nail gun and compound mitre saw, but a bob cat I think I would have to be very hands on with the renovation journey! Perhaps in a year or so?!
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I totally agree Small plant or hand tools can be a great asset and that is the point I was trying to make. I have all I need to patch plaster board, do minor plumbing repairs or paint, I don’t want to be held up waiting for minor repairs and maintenance, But if a sewer line needs re-locating or a yard needs leveling then I leave it to the experts. If you do get stuck and need larger items of plant you can always hire them.
What I don’t agree with is the statement “If you prefer to have the work done for you, it will cost significantly more to get it done.”
this assumes that you have enough work to keep your equipment working most of the time, It is only going to cost you less if you are covering all the costs of owning the equipment including the lost opportunity cost of having your money tied up in the equipment.
Yeah – hiring stuff is awesome, and you can mostly guarantee that it has been maintained and works well. I hired a jack hammer to remove a hearth. Great piece of equipment, but expensive outlay and only a few dollars to hire! I got a sewer pipe replaced, and I was happy to pay for that one, especially in clay basalt soils!
Simple rule – buy tools, rent equipment, hire labour (when required).
Tools etc yes large machinary no I would rather hire or find someone that has access to one and use them/swap for something I may have.
I would definitely prefer buying my own equipment. That depends on how much you know about the specific equipment you're buying. I'm kind of a do it yourself guy.
If you are going to use the equipment for a short period of time then you better rent one instead of buying.