When to Use Construction Equipment For Sale？

How do you decide when to buy construction equipment and when to rent what you need?

Whether you’ve got some big contracts up ahead, you’re expanding your company’s capabilities or you just need to replace your current heavy equipment, there are a number of factors to consider when it comes to acquiring construction equipment for your commercial construction company. Trying to decide if you should buy or rent the equipment can be a headache in itself.

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There are several things to consider before jumping in one way or the other when it comes to buying or renting big, expensive, earth-moving equipment. With pros & cons to both, it’s worth taking the time to consider your company’s current situation, future plans, and figuring out which will be the most advantageous to your business.

We’ve composed this list of 10 important considerations to help you get started.

1. Consider Your Current And Future Financial Situation

Look at your current financial situation to decide if you have the capital to buy the construction equipment that you need, or if renting may be a better option. Look beyond your current situation and project your costs over several months or years for both purchasing and renting, then compare the two. Buying may be a larger one-time financial burden, but the cost of renting can add up quickly, and over a long period of time it could end up costing you more. Not to mention, when you own, you will see a return on your investment when you sell.

2. Compare the Cost of Ownership and Cost of Renting

Estimate the cost of owning your own equipment and compare it to the cost of renting the equipment. Ownership means maintenance and operating costs, insurance and other fees such as government licensing. These costs vary from machine to machine so it’s important to calculate it and see if it’s still in your budget or not. Fuel is a cost for both owning and renting that needs to be considered. Roughly, one-third of your total expenses will be for the cost of fuel. Talk to your financial advisor about the possible tax implications (or advantages) of buying or renting equipment for your business. Tip for U.S. equipment owners: you may be able to avoid paying capital gains tax when you sell and buy equipment for your business.

3. Consider The Length of Your Project or Frequency of Jobs

How often this piece of equipment will be used could be the deciding factor in whether you rent or buy the construction equipment that you need. If it’s a short term job or one-time thing, then renting probably makes more sense. If you’re working on a long project, or if you’ve got several jobs coming up, then buying could make sense. If it’s a multi-purpose piece of equipment (loaders, excavators, skid steers, forklifts, trucks etc.) that can be used as an asset on any jobsite could be worth investing in.

4. Consider Risks of Equipment Availability

When you plan to rent equipment, there is always the potential risk of a rental company not having the machine you need when you need it. Taking on jobs without planning notice and changes in project schedule could be more detrimental to your business than you think. The big advantage of owning your own equipment is that it’s yours - available to you 24/7. You can react to unexpected changes in projects or project schedules, take on last minute jobs and complete projects with less downtime.

5. Keep in Mind Fleet Management and Inventory Control

Before jumping into to owning your own fleet of equipment or new equipment, you should always consider equipment management and inventory control. Do you have the skills and the time, or the employees to take care of insurance, maintenance, etc? If you don’t, you may want to pay a little extra to rent.

6. Consider Tax Time

Talk to your accountant or bookkeeper, someone with experience who you can trust, and figure out where you will stand at tax time if you purchase or rent this piece of equipment. Rental expenses can sometimes be deducted as a business expense. Buying a piece of construction equipment, however, is a capital expense that must be treated as such at tax time. You can't deduct the entire expense during the year in which it was purchased. The capital costs are then depreciated over the useful life of the piece of equipment. You may be able to leverage a depreciation deduction for the equipment you have purchased for your business.

7. Consider and Compare Interest Rates

Equipment manufacturers and dealers are always working to provide business owners with low financing to make it more attractive to buy equipment. Do your research to see if now is a good time to be with low interest rates. Shop around a find a financing option that is right for you. If interest rates are really high right now, you may be better off renting until rates go down.

8. Be Aware of Depreciation/Resale Value

Do your research on the different brands and models before you decide to purchase the construction equipment that you need. Some may hold their value better than others and will be a better investment for resale value. Buying quality used equipment can be a good option too. If you know you may be selling in the future, selecting the right equipment based on annual depreciation and performance might be the financial difference that helps you decide to rent or buy.

9. Factor In Transportation Costs

We’ve discussed some financial considerations already, but transportation cost is one expense that many contractors overlook. How far are you planning to travel for jobs and what is it going to cost to transport this equipment? After the costs of the truck, the driver and diesel fuel are considered, would it make more sense to rent equipment at the job location than to transport it?

10. Consider Purchasing New or Used Construction Equipment

Both new and used construction equipment have their advantages and disadvantages. Once you’ve determined your budget and all of the items listed above, you should have an idea of where you stand. Maybe you thinking purchasing would be a better fit than renting, but aren’t sure if you can afford it or not. If you’ve determined that the heavy equipment that you need is way over what you can afford, look at a trusted used dealer like Thompson Rental Services. They can help you figure out what you can afford. New or used - always inspect the equipment before purchasing. Take the equipment for a test run to see how it handles and listen for odd noises. Have a trusted certified mechanic look it over and make sure it is mechanically sound.

Some extra precaution before purchasing will save you many big headaches later.

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We have hundreds of construction equipment for sale or rent including: Toro, ASV, IHI/Kato & More. We carry parts for Toro construction products, ASV loaders, IHI/Kato Mini Excavators, Bomag light construction products, and various other equipment that we sell. We service all equipment that we sell. We do offer field service as well. Our sales professionals will be glad to assist you.  Please visit one of our three construction equipment dealer locations.

Exploring the used construction equipment market involves evaluating the many factors that affect it. From demand trends and market dynamics to detailed investment analysis, several moving parts are at play. By understanding market dynamics and buyer preferences, stakeholders can make informed decisions to optimize returns in a dynamic sector.

How Big Is the Used Construction Equipment Market?

As of , the market size for used construction equipment is $109 billion. Projections indicate that the market will be worth $152 billion in .

The used construction equipment market is a significant segment within the broader construction industry. It’s driven by factors such as cost-effectiveness, availability, and technological advancements. With the construction industry being one of the largest industries globally, the demand for equipment remains robust. The market encompasses a wide range of machinery, from excavators to cranes and beyond.

Factors Influencing Market Growth

Factors influencing the growth of the used construction equipment market are multifaceted and can vary depending on the economic, technological, and regulatory landscapes.

• Economic conditions: Economic growth or recession directly impacts construction activity. This subsequently affects the demand for used equipment. Strong economic conditions often lead to increased construction projects, driving up demand for used equipment.
• Construction industry trends: Shifts in construction methods, such as modular construction or sustainable building practices, can influence the types and quantities of equipment needed, affecting the used equipment market.
• Infrastructure investment: Government spending on infrastructure projects affects the market. If government bodies invest in more roads, bridges, and utilities, demand for new and used construction equipment rises.
• Demographics: Population growth and urbanization drive the need for new infrastructure and real estate development. This spurs demand for construction equipment.
• Technological advancements: Innovation in construction equipment, like the integration of Internet of Things (IoT) devices, automation, and telematics, can impact the lifecycle of used equipment.
• Regulatory environment: Changes in environmental regulations and safety standards can affect the types of equipment in demand. These changes also influence pricing dynamics in the used market.
• Rental market dynamics: The availability and cost of renting construction equipment can impact the decision-making process for purchasing new or used equipment.
• Global trade dynamics: Tariffs, trade agreements, and currency fluctuations can influence the market by affecting the availability and cost of used equipment, especially for imported machinery.
• Availability of financing: Access to financing options and interest rates affect the affordability of purchasing new and used equipment, influencing market growth.
• Maintenance and repair costs: Maintaining and repairing used equipment can influence purchasing decisions, especially if newer models offer lower maintenance costs.
• Market saturation: Saturation in the new equipment market can increase demand for used equipment. Buyers may seek more cost-effective options, turning to used equipment alternatives.
• Industry consolidation: Consolidation among equipment manufacturers or rental companies can impact new and used equipment’s supply and pricing dynamics.
• Environmental awareness: Increasing awareness surrounding construction sustainability may influence preferences toward used equipment, which can be perceived as more environmentally friendly due to reduced manufacturing impact.
• Resale value: Resale value considerations, such as brand reputation, equipment condition, and market demand, influence the attractiveness of investing in used construction equipment.
• Market competition: The intensity of competition among sellers in the used equipment market can influence pricing and availability, affecting overall market growth.
• Market perception: Perception of used equipment quality, reliability, and performance relative to new equipment affects buyer preferences and demand in the market.

Investment Analysis in the Used Construction Equipment Sector

Investment analysis in the used construction equipment market involves the evaluation of risks and opportunities. By conducting thorough investment analysis, stakeholders can make informed decisions to mitigate risks and capitalize on opportunities in the dynamic used construction equipment sector.

Identifying Profitable Investment Opportunities

Investing in the used construction equipment market presents several profitable opportunities for savvy investors. Firstly, focusing on high-demand equipment such as excavators, loaders, and cranes can yield significant returns due to their widespread use in various construction projects. These machines typically maintain their value and are in demand across different geographic regions.

Another lucrative investment avenue is specialized equipment catering to specialized industries, like tunneling equipment, forestry machinery, and paving machines. While these segments may have smaller market sizes, they often command higher prices due to their specialized nature and limited availability.

Targeting emerging markets or regions experiencing rapid infrastructure development can be highly profitable. These areas often have a growing demand for new and used construction equipment as they undergo urbanization and industrialization. Investing in refurbishing and resale operations is another avenue to explore. The right investment can generate substantial returns.

Technological advancements, such as telematics and IoT devices, can enhance the efficiency and productivity of used equipment and increase its value proposition. This makes it more attractive to potential buyers and drives profitability in the used construction equipment market.

Potential Investment Risks and How to Mitigate Them

There are several risks to be aware of when considering investing in the used construction equipment market. Economic fluctuations and market volatility can affect demand for construction equipment, leading to potential declines in resale value. Additionally, changes in government regulations and policies related to construction and environmental standards can impact the market dynamics and demand for certain types of equipment.

Another risk is the potential for unforeseen maintenance and repair costs. Used equipment may have hidden defects or wear and tear that could require significant rectification investment, cutting into potential profits. Moreover, market saturation and competition from other sellers can pose challenges. This is especially true in regions with a surplus of used equipment offerings.

To mitigate these risks, investors should conduct thorough research before making investment decisions. This includes assessing market conditions, demand trends, and regulatory environments. Performing comprehensive inspections and assessments of used equipment to identify any potential issues or maintenance needs can help minimize unexpected costs down the line.

Diversifying investments across different types of equipment and geographic regions can spread risk and reduce reliance on specific market segments. Developing strong relationships with reliable suppliers and establishing efficient refurbishment and resale processes can also enhance profitability and mitigate operational risks. Staying informed about industry developments and leveraging technological tools for equipment management and maintenance can improve decision-making and risk management strategies.

Making Informed Decisions

Making informed decisions in the used construction equipment market requires careful consideration of various factors. Conducting thorough research on market trends, equipment pricing, and demand dynamics is crucial. This involves analyzing historical sales data, monitoring market fluctuations, and staying informed about industry developments. Evaluating the equipment’s condition, age, and maintenance history is essential to assess its value and potential longevity.

Considering the specific needs of a project helps tailor equipment selection to optimize operational efficiency and productivity. By combining comprehensive research, extensive evaluation, and prudent decision-making, stakeholders can navigate the used construction equipment market effectively and maximize the return on investments.

Sustainability Practices in the Used Equipment Sector

Sustainable practices in the used construction equipment sector involve various strategies to reduce environmental impact, promote resource efficiency, and foster responsible business practices.

• Equipment refurbishment: Refurbishing used construction equipment extends its life span. It reduces the need to manufacture new machinery, minimizing waste generation. This practice also helps maintain equipment performance and reliability while reducing overall lifecycle costs.
• Emission reduction: Implementing emission control technologies and retrofitting older equipment with cleaner engines can help reduce air pollution and carbon emissions associated with construction activities. Upgrading equipment to meet current emissions standards contributes to sustainability.
• Energy efficiency: Promoting energy-efficient equipment and practices during equipment operation and maintenance can lower fuel consumption and minimize emissions. Employing technologies, like hybrid engines or electrification options, can further reduce energy efficiency.
• Waste management: Proper disposal and recycling of end-of-life equipment components and materials minimize landfill waste and promote resource recovery. Implementing effective waste management practices throughout the equipment lifecycle, including dismantling, recycling, and disposal, reduces environmental impact.
• Sustainable procurement: Encouraging certified or verified sustainable materials and components in refurbishment and maintenance promotes responsible sourcing practices. Partnering with suppliers committed to sustainability principles ensures the adoption of environmentally friendly solutions.
• Lifecycle assessment: Conducting comprehensive lifecycle assessments of used equipment helps identify opportunities for improvement and optimization across the entire equipment lifecycle, from manufacturing and operation to end-of-life disposal.

Cost-Saving Strategies for Acquiring Used Construction Equipment

Acquiring used construction equipment can offer significant cost savings compared to purchasing new machinery. Here are several strategies to optimize cost savings when acquiring used construction equipment:

• Auction purchases: Participating in equipment auctions is a great way to acquire machinery at competitive prices. Auctions provide opportunities to purchase used equipment from various sellers, including leasing companies, contractors, and equipment dealers.
• Direct purchases from sellers: Negotiating directly with individuals or companies can sometimes lead to favorable pricing, especially if the equipment has been on the market for an extended period. Building relationships with reliable sellers can also result in future cost-saving opportunities.
• Bulk purchases: Buying multiple pieces of equipment from the same seller or as part of a package deal can often result in discounts or reduced pricing per unit. This strategy particularly benefits contractors or rental companies looking to expand their fleets.
• Seasonal sales: Monitoring the market for seasonal fluctuations in equipment demand can present opportunities to purchase used machinery at lower prices during off-peak periods.
• Online marketplaces: Using online platforms and marketplaces dedicated to buying and selling used construction equipment can provide access to a wide range of inventory and competitive pricing. These platforms often allow buyers to compare prices and equipment specifications conveniently.
• Lease returns: Exploring lease return options can be another avenue for acquiring used construction equipment at reduced prices. Lease returns often involve well-maintained machinery that has been returned to the lessor after the lease period. This offers cost savings compared to purchasing new equipment.

Financing Options for Used Construction Equipment

Various financing options are available for used construction equipment.

• Traditional loans: This approach involves borrowing money from financial institutes or banks to purchase equipment outright. Repayment terms typically include fixed and variable interest rates and scheduled payments over a specified period.
• Leasing: In this option, you would enter into a lease agreement where you pay a monthly fee to use the equipment for a predetermined period. At the end of the lease, you may have the option to purchase the equipment at a preset price.
• Equipment financing: This is specialized financing tailored for purchasing equipment, often with flexible terms and repayment structures. This option allows businesses to conserve cash flow while acquiring essential machinery.
• Rent-to-own: This means renting equipment with the option to purchase it at the end of the rental period. A portion of the rental payments may be applied toward the purchase price, providing a gradual path to ownership.
• Vendor financing: This is financing offered by equipment dealers or manufacturers, typically with competitive rates and convenient payment terms. This option streamlines the purchasing process by integrating financing with equipment acquisition.

Navigating the Future of Used Construction Equipment

Over the next few years, used construction equipment market volume will see considerable growth, signifying the increasing demand for used machines across many sectors. A thorough analysis of the used construction equipment market is essential for maximizing investment returns and minimizing risks. By considering market trends, equipment conditions, and buyer conditions, stakeholders can navigate this sector effectively and capitalize on opportunities for growth and profitability.

The Role of Thompson Tractor in Supporting the Used Construction Equipment Market

Thompson Tractor supports the used construction equipment market by providing a diverse inventory of used Cat® construction equipment. Our selection of used and rental equipment provides companies, contractors, and others with an array of machinery. Catering to a variety of project needs and budgets helps those in the market find what they need at affordable rates.

Providing quality assurance is another way we support the market. As a dependable Cat dealer, we ensure the quality of our new and used product selection. Our customers can trust that our Cat-certified used machines are in proper working order and will perform jobs as expected. Our available machinery matches the highest standards of the used construction equipment market.

The support services we offer take our offerings to the next level. From advice to maintenance, we offer a range of auxiliary services that go beyond our products. Thompson Tractor has been building relationships for over 60 years. We are reliable, trustworthy and experienced in the industry, so you know that everything we do is to support you and your project requirements.

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