# Lease or buy bobcat for snow only use



## SnowmanBoston

I need to acquire a new skid steer for snow removal operations. I think I'm going to go with a bobcat S595. Right now bobcat offering 0% financing 60 months. Purchase price would be just under $50K with payments around $830/month. The power lease for this machine is $530 per month for 36 months. If I bought the machine after the lease it would cost $3500 more because of the lease and total machine cost would be $53,500. 

The machine would be used 95% of the time for snow only. It would sit in the garage most of the summer. 

I would profit at least $20K per winter with the machine and put max of 100hrs per year on the machine. 

I have a good relationship with the person feeding me the work and bigger jobs are available to me as I get more equipment. 

Lease or buy? Thanks


----------



## John_DeereGreen

That's a question for your accountant, not the guys on plowsite.


----------



## 1olddogtwo

So....u charge north of 300 per hour to profit 20K after labor Fuel and maintenance?


----------



## Philbilly2

0% is not typically 0%. 

Ask what the cash buy price is. If there is not a cash discount, then it might be true 0%. Typically the cash discount is about 4.5%... weird huh...

Last time I personally remember seeing "true 0% financing" was at the tail of the building recession back in 2012ish? Kubota offered it on new equipment. Cash price was same a finance price at end.


----------



## SnowmanBoston

1olddogtwo said:


> So....u charge north of 300 per hour to profit 20K after labor Fuel and maintenance?


I use the machine to spread salt too. There is also some shoveling. So after you factor everything in the contract profit is $20K minimum, realistically closer to $25K. Maintenance will be minimal. I plan to change oil/filter 2x per year, and hydraulic fluid/filter once per year, fuel filter 2x per year. Maintenance down the road is what's making me question buying or leasing. Should I just be happy with that profit and always have a new machine under warrantee with minimal headaches? Or buy the machine and run the thing forever cause hours will be low? Will a machine that's 10 years old with 1200 hours require the same amount of money to maintain as a machine that's 2 years old with 1200 hours? How much will the machine age just because of time? It will sit indoors all summer.


----------



## SnowmanBoston

John_DeereGreen said:


> That's a question for your accountant, not the guys on plowsite.


Leasing probably better from a tax perspective because I don't plan to grow the company like crazy and buy a bunch of new equipment every single year.


----------



## SnowmanBoston

Philbilly2 said:


> 0% is not typically 0%.
> 
> Ask what the cash buy price is. If there is not a cash discount, then it might be true 0%. Typically the cash discount is about 4.5%... weird huh...
> 
> Last time I personally remember seeing "true 0% financing" was at the tail of the building recession back in 2012ish? Kubota offered it on new equipment. Cash price was same a finance price at end.


Cash price is $1700 discount, plus whatever I can get the dealer to discount the machine on their end. I think the discount I get from dealer will be same regardless of cash or finance. Saving $1700 over 5 years to avoid paying out $50K at once doesn't make sense to me.


----------



## Philbilly2

SnowmanBoston said:


> Cash price is $1700 discount, plus whatever I can get the dealer to discount the machine on their end. I think the discount I get from dealer will be same regardless of cash or finance. Saving $1700 over 5 years to avoid paying out $50K at once doesn't make sense to me.


I am commenting on the 4.5% rate... in your case it is closer to 3.5%... I am just pointing out that you may be able to shop the rate if you do the math first.

0% financing is not 0% financing if it is going to cost you 3.5%. I understand that they are advertising this as "0 percent for 60 month", but they should be advertising at "3.5% financing for 60 months" as that is what you are really paying... they are just adding the financing to the cost of the machine.


----------



## Philbilly2

SnowmanBoston said:


> Saving $1700 over 5 years to avoid paying out $50K at once doesn't make sense to me.


As Jarrett pointed out earlier, you need to speak with your accountant.

The best way I can explain this is:

It may not make sense to you. Many things in business make no sense to a business owner. I personally do not have to lease a single piece of equipment that I have have from a financial capital standpoint... but my accountant tells me otherwise. It makes no sense to me either, but from a tax standpoint, it makes all the difference to my accountant.

Your accountant is the person that is going to tell you where you stand for the year and tell you which way you need to go. (that is if you are making "actual profit" on your K-1 schedule of your tax form)

If you are not turning an "actual profit" on your 1120 do what ever makes you happy.


----------



## Philbilly2

SnowmanBoston said:


> I use the machine to spread salt too. There is also some shoveling. So after you factor everything in the contract profit is $20K minimum, realistically closer to $25K. Maintenance will be minimal. I plan to change oil/filter 2x per year, and hydraulic fluid/filter once per year, fuel filter 2x per year. Maintenance down the road is what's making me question buying or leasing. Should I just be happy with that profit and always have a new machine under warrantee with minimal headaches? Or buy the machine and run the thing forever cause hours will be low? Will a machine that's 10 years old with 1200 hours require the same amount of money to maintain as a machine that's 2 years old with 1200 hours? How much will the machine age just because of time? It will sit indoors all summer.


Pat is pointing out that you will still have insurance costs, fuel costs, labor costs, breakdown costs... getting to a 20K profit on one machine alone in the idustry mean that the machine needs to go out at a unreasonable rate...

Unless you are just not going to have any of those costs, then no sweat... payup


----------



## John_DeereGreen

SnowmanBoston said:


> Cash price is $1700 discount, plus whatever I can get the dealer to discount the machine on their end. I think the discount I get from dealer will be same regardless of cash or finance. Saving $1700 over 5 years to avoid paying out $50K at once doesn't make sense to me.


If you're looking to save money, unless you're one of those people that has to have the "newest" everything, take a look at an S590 instead of the 595. There are some pretty attractive discounts for taking leftover machines right now. 


Philbilly2 said:


> As Jarrett pointed out earlier, you need to speak with your accountant.
> 
> The best way I can explain this is:
> 
> It may not make sense to you. May things in business make no sense to a business owner. I personally do not have to lease a single piece of equipment that I have have from a financial capital standpoint... but my accountant tells me otherwise. It makes no sense to me either, but from a tax standpoint, it makes all the difference to my accountant.
> 
> Your accountant is the person that is going to tell you where you stand for the year and tell you which way you need to go. (that is if you are making "actual profit" on your K-1 schedule of your tax form)
> 
> If you are turning a "actual profit" do what ever makes you happy.


Agreed.

I do what my accountant says, most of the time. I have never regretted that decision.


----------



## Philbilly2

SnowmanBoston said:


> Leasing probably better from a tax perspective because I don't plan to grow the company like crazy and buy a bunch of new equipment every single year.


Talk to an accountant...

The word "probably" is how you loose your a$$


----------



## John_DeereGreen

I missed the salt part. If I have a machine that's loading salt or spreading salt, and I have the option to lease it, that's certainly the route I take. Now the exception would be a machine dedicated to loading salt, but not everyone has that. 

Salt destroys everything. And it makes things a real pain to wrench on.


----------



## John_DeereGreen

Philbilly2 said:


> Unless you are just not going to have any of those costs, then no sweat... payup


And if you figure out how to operate a successful business without those costs involved,you won't ever have to worry about plowing snow again!


----------



## Philbilly2

John_DeereGreen said:


> And if you figure out how to operate a successful business without those costs involved,you won't ever have to worry about plowing snow again!


Come on...


----------



## Mark Oomkes

Leasing works for me for 2 big reasons:
1) With all the emissions garbage that can go bad I don't want a machine for more than 3 years;
2) With all the electrical garbage on Bobcats I don't want a machine for more than 3 years. 

I use mine in the summer, not a lot but enough I'd need to rent one too often. But not really enough to justify owning one.

My winter contracts cover the lease payments plus labor, fuel, insurance, maintenance and profit.

Plus, if my needs change, I can turn it back in and not have to sell it.

$20k profit on one job...at 20% net that's a $100,000 contract. A lot of work for 1 smaller machine.


----------



## Philbilly2

Mark Oomkes said:


> $20k profit on one job...at 20% net that's a $100,000 contract. A lot of work for 1 smaller machine.


There you go with this math thing again Oomkes!


----------



## Mark Oomkes

Philbilly2 said:


> There you go with this math thing again Oomkes!


Wish the newbies would enlighten us old farts....I've been at it for 30+ years, never found an account that 1 machine could handle that I could net $20k on.

Or plow 36 driveways, some shoveling, and a road for $1900\push.

Or 22 townhomes, a couple steps each, and road for $850\push.

I'm the one that needs some skooling.


----------



## SnowmanBoston

Philbilly2 said:


> As Jarrett pointed out earlier, you need to speak with your accountant.
> 
> The best way I can explain this is:
> 
> It may not make sense to you. Many things in business make no sense to a business owner. I personally do not have to lease a single piece of equipment that I have have from a financial capital standpoint... but my accountant tells me otherwise. It makes no sense to me either, but from a tax standpoint, it makes all the difference to my accountant.
> 
> Your accountant is the person that is going to tell you where you stand for the year and tell you which way you need to go. (that is if you are making "actual profit" on your K-1 schedule of your tax form)
> 
> If you are not turning an "actual profit" on your 1120 do what ever makes you happy.


Thanks for input


----------



## SnowmanBoston

Philbilly2 said:


> Pat is pointing out that you will still have insurance costs, fuel costs, labor costs, breakdown costs... getting to a 20K profit on one machine alone in the idustry mean that the machine needs to go out at a unreasonable rate...
> 
> Unless you are just not going to have any of those costs, then no sweat... payup


Yes I have labor, fuel, insurance just like everyone else. All of that is covered we "profit" $20K+. I wouldn't call it an unreasonable rate. I would call it the rate that I'm comfortable doing the job for and working the machine at. Premium service has a premium price.


----------



## SnowmanBoston

John_DeereGreen said:


> If you're looking to save money, unless you're one of those people that has to have the "newest" everything, take a look at an S590 instead of the 595. There are some pretty attractive discounts for taking leftover machines right now.
> 
> Agreed.
> 
> I do what my accountant says, most of the time. I have never regretted that decision.


Thanks I'll look into the 590. Don't need latest and greatest, but willing to spend a little more to eliminate as many headaches as possible.


----------



## SnowmanBoston

John_DeereGreen said:


> I missed the salt part. If I have a machine that's loading salt or spreading salt, and I have the option to lease it, that's certainly the route I take. Now the exception would be a machine dedicated to loading salt, but not everyone has that.
> 
> Salt destroys everything. And it makes things a real pain to wrench on.


That's a good point about the salt.


----------



## SnowmanBoston

Mark Oomkes said:


> Leasing works for me for 2 big reasons:
> 1) With all the emissions garbage that can go bad I don't want a machine for more than 3 years;
> 2) With all the electrical garbage on Bobcats I don't want a machine for more than 3 years.
> 
> I use mine in the summer, not a lot but enough I'd need to rent one too often. But not really enough to justify owning one.
> 
> My winter contracts cover the lease payments plus labor, fuel, insurance, maintenance and profit.
> 
> Plus, if my needs change, I can turn it back in and not have to sell it.
> 
> $20k profit on one job...at 20% net that's a $100,000 contract. A lot of work for 1 smaller machine.


Good point on the electronics. That's exactly what I want to avoid. Running at much higher than 20% net margin.


----------



## SnowmanBoston

Mark Oomkes said:


> Wish the newbies would enlighten us old farts....I've been at it for 30+ years, never found an account that 1 machine could handle that I could net $20k on.
> 
> Or plow 36 driveways, some shoveling, and a road for $1900\push.
> 
> Or 22 townhomes, a couple steps each, and road for $850\push.
> 
> I'm the one that needs some skooling.


With all the increases in equipment costs and insurance not worth plowing for 10-20% margins anymore in my opinion. I used to have larger company with 30+/- pieces of equipment on the road during the storms. Sold the company 15 years ago. Started over and kept it small, and jacked my prices up. When I was younger I wanted to be one of the big guys, now I want to be the very profitable guy with minimal headaches. my internet marketing is really good. When someone searches for plowing they find me. I do 10-20 estimates and get 1 contract. Do the estimate with satellite images, throw out a feeler price and if customer is interested go meet them onsite and check everything out. I keep all of my equipment on 2-4 sites, and I'm there working with the crew every single moment they are there. There's been several times that October 15th came around and I had nothing. But never fails some HOA or MGMT company needs something last minute and they pay. I use all seasonal operators, so I don't have to worry about keeping people working over the winter, if there's no good work then I pass. Last 2 seasons I've had zero turnover. People appreciate and pay for premium service.


----------



## abbe

Bobcat reports to your local municipality for property taxes fyi. At least Wells Fargo does when handling their leases. They don't factor that into the lease payment and they should. or at least make you aware.

A close friend has 5 near new units on lease for a few years and got slapped by the municipality with a hefty and unexpected tax bill. I deal with my Cat dealer and they have steered clear of reporting.


----------



## SnowmanBoston

abbe said:


> Bobcat reports to your local municipality for property taxes fyi. At least Wells Fargo does when handling their leases. They don't factor that into the lease payment and they should. or at least make you aware.
> 
> A close friend has 5 near new units on lease for a few years and got slapped by the municipality with a hefty and unexpected tax bill. I deal with my Cat dealer and they have steered clear of reporting.


Excise tax bill? Did your friend have plates on the machine?


----------



## abbe

No, that's how Rhode Island really puts the screws to the little guy. Property tax on equipment even if it isn't registered for road use. I assume mass must be similar since we are both in the liberal dump of the north east.


----------



## Doin_It

Yea............


----------



## Camlaw

Supposed to pay excise on equipment..in mass. Anyway


----------



## SnowMatic

SnowmanBoston said:


> I need to acquire a new skid steer for snow removal operations. I think I'm going to go with a bobcat S595. Right now bobcat offering 0% financing 60 months. Purchase price would be just under $50K with payments around $830/month. The power lease for this machine is $530 per month for 36 months. If I bought the machine after the lease it would cost $3500 more because of the lease and total machine cost would be $53,500.
> 
> The machine would be used 95% of the time for snow only. It would sit in the garage most of the summer.
> 
> I would profit at least $20K per winter with the machine and put max of 100hrs per year on the machine.
> 
> I have a good relationship with the person feeding me the work and bigger jobs are available to me as I get more equipment.
> 
> Lease or buy? Thanks


SnowmanBoston... Hate to tell you this. 
I just recently got a quote on a S595 also. Loaded. Just under $46k after discounts with the 0% for 60 deal. $766 a month.. (including Dealer PDI and Freight Charge fees)--- Does anyone know if those two fees are negotiable?

Concerning the powerlease option. $562 a month with the tax.
What I cant figure out is...
My option to purchase at the end of 3 years is $2268.00 less than if I would take the 0%/60mnth option. Making Total cost just over 43K
What am I missing here..If looking to buy, almost a no brainer to do the lease and then buy at the end of 36 and save $2268 dollars.



abbe said:


> Bobcat reports to your local municipality for property taxes fyi. At least Wells Fargo does when handling their leases. They don't factor that into the lease payment and they should. or at least make you aware.
> 
> A close friend has 5 near new units on lease for a few years and got slapped by the municipality with a hefty and unexpected tax bill. I deal with my Cat dealer and they have steered clear of reporting.


...and there it is in the fine print on the quote. Lessee will be billed annually for PPT as required by applicable tax authority or jurisdiction. Same for Use tax, billed monthly. And also... Powerlease monthly payment does not include doc fees.
There goes the $2268 in savings I guess...


----------



## SnowmanBoston

SnowMatic said:


> SnowmanBoston... Hate to tell you this.
> I just recently got a quote on a S595 also. Loaded. Just under $46k after discounts with the 0% for 60 deal. $766 a month.. (including Dealer PDI and Freight Charge fees)--- Does anyone know if those two fees are negotiable?


Was that price including High flow? Joystick, sound proof cab, radio? Thanks


----------



## SnowMatic

No on the high flow so maybe thats where the difference is.
A71 pkg, joysticks, air ride seat, radio, bucket positioning, reverse fan, ride control, snow bucket, and side light kit.


----------



## reedo

What are you going to be putting on the machine for pushing snow? A 590/595 might be a little small for a number of attachments possibly.


----------



## SnowMatic

Reedo..if you were asking me.
8ft pusher as of now. Might go with a 9ft/10ft down the road and maybe one of those hydraulic blade/pusher combos like snowwolf has out...

Actually im thinking of going along the lines of a bobcat S650 or Caterpillar 262d instead of the 595 in a wheeled machine. 
Or if I go tracked then the Bobcat T595 or Caterpillar 257d in a tracked machine, as the weight of the machines will be comparable to the wheeled machines.


----------



## reedo

The 650/262 will definitely help, especially if thinking of going bigger than 8’. As far as track machines everything I have seen or heard has been that they are worthless in snow removal unless equipped with a “polar track” of some sorts or unless you go with a Cat MTL/ ASV undercarriage. The blade/pusher combo like the Snow Wolf and Kage are excellent. We have been very happy with ours.


----------



## Mark Oomkes

8' would be a waste on an S650.


----------



## SnowMatic

Mark,
Yes it probably would be, but i was thinking that if i ever went with a bigger pusher than I would be covered with the bigger machine.

Snowmanboston,
curious, which machine did you end up going with?


----------



## Goodnyou

Not sure which dealer your talking to. Bobcat of Boston does no favors for anyone and service takes forever . For a long time they had one road guy to cover everything. Call dennis at bobcat of NH in Hudson. No sales tax and a better price . I bet you can save $4000 .


----------



## Pope of Plowing

I second bobcat of Nh! Eric in their service Dept is great and has even got me out of jams picking up my machines in Boston or sending down techs.


----------



## SnowmanBoston

SnowMatic said:


> Mark,
> Yes it probably would be, but i was thinking that if i ever went with a bigger pusher than I would be covered with the bigger machine.
> 
> Snowmanboston,
> curious, which machine did you end up going with?


Went with the 595 A91. This is the fully loaded high flow machine. I love it. Most snow we received thus far is 7 inches and i've been using the 8ft pusher with no problems. Im hoping to demo a 10ft pusher at some point if i can find one. So far havent seen a reason for a bigger machine. Cat 262 or bobcat 650 seems like over kill for snow operations. The only thing i've noticed thus far that i dont like is when you switch into the 2nd speed machines takes 15-30 seconds to get the extra power.


----------



## SnowmanBoston

Goodnyou said:


> Not sure which dealer your talking to. Bobcat of Boston does no favors for anyone and service takes forever . For a long time they had one road guy to cover everything. Call dennis at bobcat of NH in Hudson. No sales tax and a better price . I bet you can save $4000 .


I thought about going to NH instead of Boston. If you finance your machine bobcat or the bank reports to a federal agency that reports back to your state. I did some research online and a lot of people bought machines out of their state to avoid sales tax and then 1-3 years later got a tax bill in the mail with penalties. I'd be very careful trying to avoid sales tax. In my situation BObcat of NH wasnt the full sales tax amount cheaper either. Always bring my machines to NH for service and maintenance.


----------



## John_DeereGreen

SnowmanBoston said:


> Went with the 595 A91. This is the fully loaded high flow machine. I love it. Most snow we received thus far is 7 inches and i've been using the 8ft pusher with no problems. Im hoping to demo a 10ft pusher at some point if i can find one. So far havent seen a reason for a bigger machine. Cat 262 or bobcat 650 seems like over kill for snow operations. The only thing i've noticed thus far that i dont like is when you switch into the 2nd speed machines takes 15-30 seconds to get the extra power.


All of our 2 speed M series loaders switch from low-high range and back in under 5 seconds. Something doesn't sound right if it's taking that long to switch.


----------

