With a degree in Business Management, Rafael Garzarelli landed a job at a bank after he graduated from The University of Utah. However, it was his experience as an Army helicopter mechanic that led him to the construction industry. Now, he combines his knowledge and experience to help builders with their rental equipment needs as CEO of Howe Rentals.
Construction jobs are on the upswing, along with associated costs. Garzarelli mentions a common misconception of contractors, “Most, I think, they’ve got the idea that if there’s something that they think they’re going to use all the time, and they’re going to have this huge job and it’ll last for a few years, then they’ll say, ‘Maybe we need to buy that.’ ”
“It is to their advantage to rent the equipment instead of trying to buy it,” states Garzarelli. “There is cost involved, of course, in the rental, but if you buy the equipment, then you’ve got to hire mechanics to maintain and repair it, and drivers to take the equipment to the job sites.”
Deonta Smith, a procurement research analyst for IBISWorld, concurs, explaining: As the economy bounces back from the recession, construction activity has picked up again and more construction firms have entered the market. Thanks to this increased activity, demand and prices for construction equipment have been rising, increasing contractors’ operating costs.
According to Garzarelli, “It’s a lot easier for contractors, when they put in their bids, or an estimate, to put a rental rate in there. Include the rental rate and delivery and everything else on it. They basically pretty much know what the labor is going to be, what the cost of materials is going to be, and what the cost of equipment is going to be.”
From the same newsletter in Construction Executive, Smith also stated, “Because contractors incorporate labor, machinery and building materials costs into their contract bids, strategizing when to rent or buy construction equipment can help them cut operating costs—allowing contractors to submit lower bids and win more business.”
Renting equipment also provides easy access to the newest and best models. Many rental companies upgrade their inventory on a regular basis. They also have specialized mechanics to keep their equipment in peak performance condition.
“If you rent a piece of equipment, and it breaks down, you just give us a call and we send a mechanic to fix it or in some instances we will replace it with another piece of equipment, so you don’t really have any down time,” another benefit Garzarelli is quick to point out.
Garzarelli knows maintenance is a large factor to consider when comparing a purchase vs. renting. “Maintenance of that equipment is usually included in the rental.” He goes on, “If it’s your piece of equipment and it breaks down, you’ve got to either take it someplace to get it fixed, or you need to have a mechanic on staff and he’s got to order parts, and wait for them to come in. We’ve got customers, they come in and they say, ‘Well, yeah we’ve got two or three of those items in our fleet, but none of them are operational.’ ”
There are additional things to keep in mind when comparing a purchase vs. renting. Garzarelli starts to list a few, “Insurance, maintenance, transportation, costs.” He continued, “You have to have the right trucks to deliver equipment to the job site.” Renting equipment also means you don’t need to store it or pay to have it stored, allowing for more cost savings.
Garzarelli’s business management background resurfaced for a final piece of advice, “Remember, rental expenses can be deducted as a business expense.”
About Howe Rentals: Howe Rental & Sales is a locally owned and operated company since 1953. The Garzarelli family purchased Howe Rents from the Charlie Howe Family in 1988. Located in Murray, Utah, Howe Rental serves the intermountain area with the largest and most complete selection of specialty quality equipment and tools to assist you with any size project.
To learn more about Howe Rentals, visit their website at: http://www.howerentals.com/.
Creator of The PRO-FOUND Process, Stephanie Miller teaches the art of promotion, discovery and recovery. A three-time best selling author, she interviews entrepreneurs on how they solve problems with their expertise.