Re: The advantage of buying older equipment.

Posted by Billy NY on November 03, 2014 at 07:40:38 from (66.67.105.23):

In Reply to: The advantage of buying older equipment. posted by Dave H (MI) on November 02, 2014 at 14:40:37:

I would agree that it can increase your profits, but like all the things mentioned, doing the repairs, overhaul whatever needed, in house, you have to be able to do that. I can look back at my silly and well worn tractor and know it owes me nothing, repairs and maintenance included, its done enough work and years ago a few jobs I used it on, really put that line item into the black, that was just being fortunate. All that time, no payment or financial burden, justified something used and or old, but capable with periodic maintenance and some up front repairs which I did myself.

I look at it like this. If you have a job, a decent paying one great, but maybe its not so well paying. So now you need a vehicle to get to that job, you cannot risk losing that job, so do you go used and spin the roulette wheel, or do you go new, payment is within means, and you just make the payment and for what should be a long period of time you just have simple maintenance, and no down time, whereas used, as we all know, depending on what you get and its condition, it could cost you. The other thing is, modern vehicles are not so friendly to the home mechanic.

So with farming, say you went and located machinery that you need in a condition that you can pencil out for overhaul, repair or whatever it takes, to get it field ready, compare against new, compare acquisition costs and repair costs to new, and include expected hours, throw in some major repairs to make that number more realistic, the only issue is that you have machinery that is X numbers of years old, no payment, (your invested$$$ though) and an expectation of certain longevity.

The farmer I worked with had a decent eye for used, and at one time before the fire destroyed his shop, could do a lot of repairs in house. He bought what made sense, not new, not antique either. Most of that was for grain crops, so he realized better profits, still had maintenance and as I recall in a certain span of several years, had one major repair on the combine, a JD6620. The tandem sileage body truck seemed to cost him in repairs and maintenance, '74 mack, he ran it for 15 years, before he upgraded to something much newer in better condition not so prone to break downs and high repair costs, as that truck usually went to a repair shop, we did not work on it. The truck was important, without it he'd have to hire out, he made it work long term, and always made a paycheck after all was said and done.

On the hay side, I believe he had sold some land over the years, probably tucked most of that away, and decided to go for some new equipment and add a late model 7720 to the fleet. He had not bought a new tractor, 30 years maybe, and this was not new, but low hour, came off the horse racing track. New round baler and disc mower, all JD. He did get a new JD heavy disc too, so for replanting, and the grain side of it, not sure where that penciled in, and it was the most new equipment I have ever seen on one farm around here. From what I could see, the hay ground was large enough to support this endeavor, few hundred acres, hay was usually all sold up front, and if that buyer stopped, he had others, so over a period of 5 years, he went at it and it seemed to go well, no real costly breakdowns, he rented the baler out besides his own work, that just filled in a few gaps, and I think I recall one repair on the baler, so as he predicted, all of it would be paid off at a certain point, he'd still have decent equipment, some equity in it, and mostly maintenance. As his health faded, he got out of grain crops, and sold off all of that equipment, just stayed with hay, and it seemed to make sense how he had it set up. The key was he had the liquidity to invest up front, but I believe he still financed some or all of it. I enjoyed helping him and learning how it all worked on his end, he kinda did both and carefully made it work.

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