If heavy equipment is in your sights, consider the advantages of owning and renting

Frequency of use is an important factor when deciding whether to rent or buy compact equipment. (Photo: Bobcat)

You’ve landed a big design/build contract, a project that can put your company on the map. While it’s a prime business opportunity, you don’t have the necessary equipment to complete the task correctly and efficiently.

Determining whether to rent or buy equipment is a necessary business decision landscape contractors face, one that must balance overall needs, cash flow and the availability of financing from either manufacturers or conventional lenders.

For contractors, cost is the prime factor in the “should I buy, or should I rent” debate, says Mike Fitzgerald, marketing manager at Bobcat Co. 

“Without question, purchasing a machine carries a greater commitment that typically includes insurance, taxes, licenses, registration, maintenance, operating expenses and transportation fees,” he says. “Depending on (a landscape contractor’s) finances, it may be difficult to justify the total cost of ownership compared to a flat monthly rental rate for a machine that is delivered to a job site.”

Various cost calculators are available to landscape pros online, breaking down some considerations to buy or rent equipment. For example, to determine a machine’s total rental cost, multiply the rental rate (per year/month/day) by the rental period (number of years/months/days) and then add the pickup/delivery charge. To calculate the total ownership cost, take the purchase cost and add the ownership cost (delivery, maintenance and insurance), then subtract the resale value.

Know your use

While it’s an important factor, cost is not the only consideration contractors must weigh when gearing up for a project. Suppose a landscape company will utilize a machine 60 to 70 percent of the year. In that case, it makes the most sense to own, says Peter Quinn, rental operations manager at Cleveland Brothers Equipment Co. in Harrisburg, Pa.

“Also, if you have specialized needs for a machine or an attachment, then it may make more sense to own vs. rent,” Quinn says. “Some smaller tools, like plate compactors and cutoff saws, also would be a more common item to own because the upfront cost is fairly minimal compared to the cost of renting on a recurring basis.”

Over the last few years, Quinn says contractors gravitate toward compact track loaders (CTLs) over skid-steer loaders.

“CTLs offer much lower ground pressure, do less damage to lawns and extend the construction season when things get wet in the spring and fall,” he says.

In addition, many landscape contractors rent and purchase mini excavators and loaders, which offer a lot of muscle and, when paired with an auger, grappler or hydraulic breaker attachment, a substantial amount of versatility for smaller pieces of equipment.

“Evaluate your job site needs and talk to your equipment dealer or rental house about what jobs you need to accomplish,” Fitzgerald adds. “They can offer recommendations on the best attachments to accomplish your goals. But the options are about as endless as your (project) needs.”

Understand your cash flow

However, if you’re operating in a northern market where your construction season is limited, purchasing equipment and attachments that will only be utilized for a handful of months out of the year may not make financial sense, says Tim Dugan, senior director of rental operations at The Home Depot Rental.

“This can strain financial capital and cash flow during the offseason,” Dugan says. “So, contractors need to be safe about their spending habits … and renting equipment can help the contractor get things done more efficiently.”

Dugan adds that the bottom line when purchasing or renting is not pursuing the wrong piece of equipment.

“A contractor may rent a skid steer believing it can be used for digging and moving large pieces of material when it is better suited for trenching and excavating,” he says. “Another mistake is misjudging the amount of time they will need for the rental. If you aren’t sure, rent for a longer duration.”