construction equipment

Renting vs. Buying Construction Equipment: Which is Better?

Equipment is often one of the most expensive costs in the construction industry, which is why many contractors have a hard time deciding whether they should buy or rent a piece of equipment. If you’re experiencing the same plight, here are some factors that you should consider:

Construction needs

When deciding whether to buy a piece of construction equipment or not, the general rule of thumb is if you use that equipment more than 60-70% of the time, it’s better to buy than to rent.

Take the time to look over your construction project and analyze your needs. For a particular piece of equipment, how often do you use it? How many hours of each working day does it need to run? Take a rock breaker for example. If your construction project entails the use of that equipment for more than 60-70% of the entire span of the job, you should buy it. Otherwise, consider hiring a breaker and other attachments.

Equipment versatility

Consider the versatility of the equipment you’re thinking of buying or renting. If it can be used for a wide variety of different construction needs, it’s a good sign that you should buy it. If you can only use it for a one-time project or a temporary job, renting might will be cheaper and won’t consume storage space whenever you don’t need it.

For example, multi-purpose equipment such as drills, backhoes, and generators are better bought than rented. On the other hand, special equipment that is rarely used is more cost-effective when rented.

Tax incentives

Consider the tax incentives and capital expenditures as well when thinking about whether to rent or buy a piece of equipment. If you rent a piece of equipment, the rental fees can be considered as a business expense when tax season comes around. Inversely, buying a piece of equipment is considered as a capital expense, meaning the costs are amortized one year after the purchase of the equipment.

Transportation

construction equipment

Another important factor to consider is transportation costs. If you buy equipment and your construction site is a considerable distance away, you might be spending more than if you rent the same piece of equipment from a nearby source. At the same time, you are also paying for driver costs, fuel, and the labor of loading and unloading the truck, as well as a truck rental if you don’t already own one.

Interest rates and deals

If you come across equipment deals that offer you a great discount, low financing, or a zero percent financing deal, consider buying that piece of equipment if it will save you money in the long run. But even though a manufacturer is offering you a shiny deal, crunch the number first before signing on the dotted line.

Should you rent or buy construction equipment? It depends on many factors, primarily your construction needs. In general, if you use that particular piece of equipment for more than eight months a year, buying it can save you more money than renting. But if renting is less expensive and more beneficial for you in terms of transportation costs, taxes, and rental fees, consider renting instead of purchasing.

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