Originally Posted by MR-G
just for thought...new ztr 50% down 150mo. for 24 mos.....completly under warrantee for 24 months....no repair costs at all...just routine maintenance....trade in value at end of 24 mos. is 50% of cost....trade in again hence 50% down is the used machine this time....rinse and repeat...we have 6 ztrs and have been doing this for over 20 yrs...never repairs, almost never down time, always have a new machine....for 150 a month...now that machine will generate over 8k a month if you use it wisely...this is a hell of a ROI (return on investment) oh and dont forget to take full depriciation at tax time on the 50% part of the machine you used....sometimes i really wonder how people get as far as they do.....
That is some great thinking. I think some people become way too attached to their equipment and wear it as a badge of honor or something because they paid it off. I really like this thinking, wow. Especially mowers that are getting used EVERY day. Again I'm not anywhere near doing this but interesting.
I remember reading in one of my landscape publications an article about debt and different business structures.
Business "A" leased all of their equipment (non truck) and replaced every couple of years. I think they were a mowing franchise.
Business "B" Did pretty much the exact thing MR-G is doing.
Business "C" kept all their old equipment and had a fulltime mechanic to fix everything.
The results at the end...........each business was very successful. And this was the point of the article. Showing how each of these strategies worked plus I think listing the pro's and con's. But again each business model worked. Business "A" and "B" put their money into new equipment. Business "C" put their money into a full time mechanic. Probably a wash between the three to see if one was better. I think the loans/debt vs. cash debate is just that, a debate. At the end of the debate you can walk away with many answers to use to make your own decisions. Sometimes it's the right one and sometimes it's the wrong one, although user dependent.
My thoughts? Financing a $50k pickup pulling around beat up mowers is a joke. Buy a decent but newer used truck and have new equipment. Your mowers are doing the work, yes your truck needs to run but each used truck I have purchased only needed minor things like brakes. Heck the one new truck I had was at the Ford dealership a ton of times luckily under warranty. Now in Grandview's case with snowplowing his truck is also used as equipment to push snow. So he needs it to be reliable too. In the end whatever way you choose needs to be right for you. And if someone else makes money (not someone starting out) and chooses to purchase that $50K truck, who cares they made the decision and it has ZERO impact on your business.
Great info on both sides.