ForConstructionPros.com

As a contractor, some of the key decisions you make revolve around equipment. Do you keep what you have? Do you acquire more? Is it time to remove items from the fleet? Is the rental market more attractive than ownership? Do you have the work to justify the expenditure? Do you have adequate equity to grow the business?

If you are in any way, shape or form contemplating equipment transactions, it is a tough market out there. New equipment is scarce; the lead times for certain types and models is a year out. Good used equipment is hard to find because those that have it are putting it to profitable use. The auctions are humming along, but the inventory they have, in many cases, isn't of the quality to justify the pricing. Even the rental markets are tight and rates are increasing.

Now what? You currently have the work and the potential for more. Do you mortgage the future or not? You can order equipment that will not be put into service for quite a few months. You can pay excessive prices for below-average used equipment. You can make a deal with your local or national rental company to cover your shortfall. Which will it be?

My guess is you are a little late in the game for this cycle to start making major commitments a year out. If you wait until the cycle breaks, you will be in much better control of the process in terms of timing and pricing.

Assess your choices

Buying used equipment to do the work is fine as long as you have control of the process, know what you are buying and have the internal and external capabilities to fix it when it breaks. The other key point here would be to know when to sell off these units once you catch up with your work. When the market swings, the price on these types of units will fall sharply.