Should My Civil Engineer Business Rent or Buy Heavy Equipment?

The rent versus buy debate is a difficult one to settle. Not all contractors and civil engineering businesses have the same goals, expertise, and needs. 

This makes both renting and buying viable business strategies when the right circumstances align. Here’s what you need to know before deciding.


Should My Civil Engineer Business Rent or Buy Heavy Equipment?

 Reasons to Rent 

There are many advantages to renting over buying heavy equipment for your civil engineer business.

 Access to Low-Maintenance Equipment 

Buying heavy-duty construction equipment may sound like a great long-term investment. But not every contractor realizes that owning heavy equipment doesn’t mean little to no long-term expenses.

Equipment must be maintained to extend its service life and ensure proper functionality on the worksite. 

Maintenance requires specialists and costs money. You don’t have to worry about these things when renting your equipment. 

Specialized construction equipment dealerships often handle maintenance themselves and even offer emergency repair services. 

No Need for Storage Heavy 

construction equipment might be built for heavy-duty tasks but isn’t designed for long-term exposed storage. 

When contemplating buying equipment, you should also consider if you have the budget and means to store it. Large storage sites aren’t cheap. In addition, you’ll need access to unrestricted transport for your equipment which is another substantial investment. 

Eliminating your storage needs will add to your bottom line and free up cash flow.

Easy Access to Specialized Equipment 

Don’t think that specialized equipment is hard to rent. It’s easier than you think, and getting to your job site is a simple matter of hiring a shipping service. You can see how much shipping would cost here:  https://www.a1autotransport.com/heavy-equipment-shipping-calculator/

Furthermore, you may need different types of machinery and heavy-duty tools over time. Projects have unique requirements, and investing in equipment you may not use on subsequent projects isn’t feasible.

Renting equipment from a dealership is easy, but selling used equipment may be tougher than you imagine. 

No More Compliance Issues 

Dealerships that rent heavy construction equipment and machinery need to stay compliant with emissions laws and other regulations overseeing the construction industry. 

As a contractor, you need to use equipment that’s up to code. But if you buy your machinery upfront, you risk ending up with tools that can be obsolete in a few months or years. 

Renting is a great way to leave someone else to worry about compliance and regulation changes.

 Project Flexibility

There are many opportunities in the construction industry. However, not all contractors, developers, and civil engineering companies are positioned or prepared enough to tackle a wide range of projects.

Maybe you’ll want to build houses with swimming pools. Perhaps you’ll have an opportunity to work on apartment complexes after a while. 

If you want to pursue more variety in future projects, it’s best to avoid buying equipment. Many tools can be highly specialized and only mandatory in particular projects. 

Therefore, renting gives you the freedom and flexibility to choose whatever projects you want, knowing that you can always get the necessary equipment, up to code and well maintained, delivered to the worksite. 

Once you’re done with a project, you can move on to the next one without being stuck with machinery and tools you may not use again. 

Cost-Effective Strategy 

Renting is considerably cheaper upfront than buying. It’s true whether you’re talking about a home or the tools used to build it. 

Remember that not all projects have the same equipment requirements. Hence, buying versus renting will limit your ability to tackle specific projects.

In addition, buying will imply further maintenance costs, repairs, upgrades to stay compliant, and much more. If you’re just starting out or don’t have immediate expansion plans, renting equipment makes more financial sense. Plus, you may even get some tax breaks and better borrowing power due to the positive cash flow.

 Reasons to Buy 

While renting equipment has many advantages, buying will often be the better strategy. It all depends on where you are with your company.

Sustain Your Growth 

Owning heavy construction equipment means your company doesn’t have to go through periods of downtime. The equipment is bought and paid for and always available to use on a project. You won’t run into supply and demand issues or worry about transportation logistics putting your projects on hold. 

Optimize Long-Term Financial Planning 

At the end of the day, renting will cost more in the long run. For that reason, think about the frequency with which you’ll use certain pieces of equipment. 

Usually, in this industry, something you’re guaranteed to use more than 60% or 65% of the time moving forward is worth buying. 

You Have the Capital and Selected a Niche 

If you want to specialize in certain projects, you probably know what equipment your company needs. It’s unlikely to change anytime soon. 

When you’re sure about what you want and can afford to buy it upfront without hurting your business, buying is the better option. Long term, it generates a higher return on investment. 

Storage and Maintenance Aren’t Issues 

Many contractors rent equipment simply because they can’t store it or don’t have the staff to service them. If these aren’t issues for your company, then buying makes more sense than renting. You’re already prepared to offset some of the expenses associated with owning equipment. Renting it wouldn’t make financial sense. 

Clarify Your Business Plan Before Renting or Buying Equipment 

If you don’t understand your business or company trajectory, you won’t know what type of heavy construction equipment or tools you’ll need. Some companies become highly specialized while others live for expansion and getting involved with multiple types of projects. How you want to grow your company and your current financial position will often influence your equipment acquisition strategy. But there are many other factors to consider, from worksite distance to storage needs, equipment frequency use, etc. While it’s not a decision to take lightly, it isn’t a make-it-or-break-it type of situation. Both have advantages and drawbacks that you can balance depending on your situation. It’s also common to buy some equipment while renting other pieces per project to maximize your return on investment and maintain good cash flow. If you need guidance in more areas of your construction business, don’t hesitate to reach out or browse our knowledge center.
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