Investing in Used Construction Equipment - Pt 2

11/8/2017 1:02:53 PM by Carissa Shaul

“Farmers are looking for a machine that they can get as much use out of as possible,” says Paul Hendrix, IronPlanet's equipment pricing analyst. “They can do that by purchasing a machine that can handle several attachments, which gives it added utility, like a skid steer loader or a multi-terrain loader (a skid steer loader with rubber tracks).”

Since these machines generally have auxiliary hydraulics to operate attachments and a coupler system on the front to quickly change them out, you can switch in a matter of minutes from a bucket to a broom, an auger to a trencher, or a fork to a grapple.

“In my opinion, that versatility attracts a farm buyer,” Hendrix says. “You don't have to have five different machines. You can have one and get various jobs done with different attachments.”

Telehandlers and skid steer loaders aren't the only pieces of equipment finding a new home on the farm. Excavators, backhoes, and graders have also become favorites among farmers.

As farms grow in size and cover more miles, well-maintained access roads have become a critical piece to the harvest puzzle. The tools to make that happen also come from construction.

“Roads must be in good condition during those critical harvest times,” Hendrix says. “A heavy rain puts a damper on that, so it's important to maintain roads. It's not out of the realm of possibility for larger farmers to partner to purchase a used grader to maintain roads. Better access to fields means trucks don't get stuck. When things get stuck, they get torn up. If you can avoid those situations, you're better off in the long run.”

No matter what piece of construction equipment you're looking to invest in, Hendrix notes that it's important for farmers to understand that this market may be a little out of their usual area, which means it's more important than ever to do some research.

“Find out what the retail price is. Talk to a dealer about transaction prices,” he advises. “Go out on the internet and look for used part and machine prices, study the market very carefully.”

A little homework can really pay off in the long run.

“When a telehandler is better suited for agriculture and it comes through a construction auction, they don't bring very good money,” says Hendrix. “The new sticker price on a telehandler is around $65,000. A year and half down the road, it might sell for $25,000. That's a substantial savings if you've been watching the construction auction market.”

He also suggests considering the rental market for giving equipment a test drive or tackling a job that may not warrant an actual investment.

“If you're looking to purchase, the rental industry allows you to rent a machine with no long-term obligation,” he notes. “You can also compare brands; one rental company might handle more than one kind. Or, go to a different rental company to try different brands.”

By test-driving a unit, you may realize that the machine you rented for a specific job is actually too small or too big. Renting gives you the opportunity to narrow down the options.

If you'd rather get by without actually purchasing, renting is a viable alternative.

“The nice thing about renting is that you don't have that initial outlay of cash,” he says. “And you don't have to worry about having a piece of equipment sit for months.”