Facility Dude

To buy or to lease? The eternal equipment question

By Kate Donnelly
Mar 19, 2015

Facilities Management, Asset Management

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To buy or to lease? The eternal equipment question Any facility, regardless of size, purpose or ownership, hinges on its equipment. Whether it's cardio machines at an athletic facility, sensitive medical equipment at a hospital or care center, or the HVAC system at your commercial or office facility, this infrastructure is the engine that drives your facility forward.

When you're inspecting the budget and deciding how much money to allot for the purchasing of new equipment, it may be worth it to weigh your options and consider leasing machinery instead of buying. Whether you're keeping people fit or simply keeping the lights on, here are a few things to consider.

Take all angles into account

Making the decision to buy or rent is, at its heart, a matter of determining costs and weighing short-term expenditures against long-term returns. Equipment rental may seem appealing from an operational standpoint, since rental costs tend to be lower than if you were to just buy a piece of equipment outright. 

As FacilitiesNet noted, one of the main things that can influence a decision to buy or rent is the frequency of use and, similarly, the estimated length of service of a given piece of equipment. If you're looking at something like a floor buffer or a cardiovascular exercise machine - something that will see daily use for years to come - it may be cheaper in the long run to make the investment up front and avoid paying more overall in repeated rentals.

Don't forget about turnover

While some facilities employ equipment that is more or less evergreen, other buildings need to keep updating their infrastructure on a more consistent basis. For example, while a carpet steamer is as useful 10 years from now as it is today, in certain industries like healthcare or personal fitness, the turnover rate is much higher. Facilities that need to update their equipment to newer or more robust models - either to stay competitive or in the wake of advancements in the field - may be looking at a significantly higher capital spending bill if they drop money on a purchase every three to five years. If you know that your facility's equipment is likely to be turned over quickly, rentals may be a better option for you.

Look at the hidden costs

Assessing the money you'll be spending either on equipment purchases or rentals involves more than just looking at the number at the bottom of the invoice. In either category, there are hidden expenses and additional considerations that must be factored in to determine the total cost of ownership, or its rental equivalent, operating costs. While the price of a given piece of equipment is a major consideration, you should also do your homework to determine how much you can expect to spend on things like repairs, replacement parts and operating costs over a given period of time.

If you're considering the rental route, make sure you know all the pieces of the puzzle. For example, does your rental agreement cover the cost of repairs, or are you responsible for covering those throughout the course of the lease? What sorts of interest rates can you expect when financing a lease? Are there any administrative costs or additional fees that could impact the final amount paid? These are all questions that you should be sure to ask before signing on the dotted line, as they can significantly impact how much you end up paying. In some cases, these considerations may even be enough to sway your decision on whether to rent or buy.

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