We're gonna talk about leasing equipment and vehicles. And I always want to remind you to get competent legal and accounting advice when doing this. Don't just rely on something I've said in this podcast. I don't know your financial and business situation. This is meant to be a primer to give you some of the big picture issues with regard to leasing and whether it makes sense for you to look into it further for your business.
NOTE: Complete transcript available at the bottom of the page.
Screw The Commute Podcast Show Notes Episode 235
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Higher Education Webinar – https://screwthecommute.com/webinars[03:41] Tom's introduction to Leasing Equipment and Vehicles [04:19] Leasing Equipment [08:43] Being eligible for tax deductions for equipment [11:00] Downside to leasing equipment [12:39] Leasing Vehicles [14:08] Sponsor message [16:28] Leasing a vehicles with dogs
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Episode 235 – Leasing Equipment and Vehicles
[00:00:09] Welcome to Screw the Commute. The entrepreneurial podcast dedicated to getting you out of the car and into the money, with your host, lifelong entrepreneur and multimillionaire, Tom Antion.
[00:00:24] Hey everybody it's Tom here with episode two hundred and thirty five of Screw the Commute podcast. Today, we're going to give you a primer on leasing equipment and vehicles. Now, this is not about leasing buildings and things like that. That was podcast 166. If that's what you're interested in. So check it out. Episode 234 Our last episode was with Mitch Davis. He's got this fantastic publicity system that you can either set it and forget it or you can work it hard if you feel like it. Either way, you can get it in Google News and Bing news and all kinds of good stuff. So check that out. Episode 234. Now grab a copy of our automation e-book. We sell it for twenty seven bucks, but you get it for free for listening to the podcast and it's saved me millions of keystrokes and allowed me to handle enormous numbers of customers and subscribers without tearing my hair out. You can grab a copy of that at screwthecommute.com/automatefree. And of course, everything we talk about today, if there's links involved, we'll be in the show notes along with the full transcript. I'm not sure you realize that you can get the full transcript of all of our podcasts at the bottom of the show notes for each episode. And if you want to find an episode, you just put the episode number. So screwthecommute.com/235 is today's episode. Hey, while you're over there, grab a copy of our podcast app and we don't leave you hanging like a lot of apps do and you don't know how to use them and there's no instructions and they expect you to figure it out. That's not the way we roll. If you go to screwthecommute.com/app, we've got screen captures and instructions on all the features so that you easily be able to take us with you on the road and listen to us on your tablet and cell phone. Our sponsor is the great Internet Marketing Retreat and joint venture program where myself and my staff work with you for a year to either get you started in an Internet business or to use the Internet to take your existing business to the next level. Just because it's a year doesn't mean it takes you a year to make money. We have people making money within the first month and saving money too. That's one thing that we specialize in, is to save you money from not getting taken advantage of by all these web people. So check it out at greatinternetmarketingtraining.com. This is the longest running ever and most successful mentor program in the field of Internet marketing over 20 years. Really, I've been teaching this about 23 years and the mentor program has been going at the retreat center here with the immersion visit. I don't know if you know about that or not, but you come to my house for an immersion week and then you live here with a very small group of like minded individuals. And that's been going on since 2002. But anyway, I've been teaching this well over 20 years. So check it out at greatinternetmarketingtraining.com.
[00:03:44] Let's get to the main event today. We're gonna talk about leasing equipment and vehicles. And again, if you're interested in information about leasing commercial space in buildings, check out Episode 166. And I always want to remind you to get competent legal and accounting advice when doing this. Don't just rely on something I've said in this podcast. I don't know your financial and business situation. This is meant to be a primer to give you some of the big picture issues with regard to leasing and whether it makes sense for you to look into it further for your business.
[00:04:22] All right. So let's get into some of the pros and cons of leasing. We'll start with equipment. And before we get started with that, let me make a blanket statement that I've heard from many business people over the years, and I agree with it myself. Rarely does leasing make sense on a personal level. Usually to take best advantage to leasing, you need to be in some kind of business to take advantage of the tax implications of leasing. And you wouldn't get those as an individual. So check with your tax professional on this. Let's get to the pros and cons with regard to equipment. Well, you can usually get the equipment you need without a really large cash investment and you can spread the lease payments out over months or years even. For instance, let's say you needed a $4000 3D printer. You might be able to lease the machine. And I'm just making numbers up here for maybe a hundred dollars a month and many lessors and a lessor would be the company that owns the equipment and is leasing it to you, may not even require a big down payment or deposit. Now, the better your credit is, the more likely they won't make you jump through that many hoops to get the equipment. And even if your credit isn't great, you've got to remember they want to move that piece of equipment and get it generating revenue. In their minds, they're trying to decide if it's better to give it to you and hope you pay. All right. And that you don't ruin the machine. Or if it's better to let it sit until a more substantial lessee, is what you would be, comes along. So don't be afraid to ask if you definitely need the equipment for your business. Another thing to keep in mind is that the lessor may require you to have insurance on the piece of equipment in case it gets lost or stolen. So you must figure this into your budget when considering how much this piece of equipment will cost you overall. Now, some companies will include a maintenance agreement as part of the deal or they will sell it to you on top of the deal. I typically lease my laptops from Dell and I pay a couple hundred dollars extra and they roll that into my monthly lease payments. I think I'm pretty sure so I can get immediate service either by phone or on site if something goes wrong. And the reason I like to do Dell, I'm not in anything great about Dell computers. It's I can build the computer with them on the phone exactly the stuff that I want that suits me. And then a couple of weeks later, there it is, shows up on my doorstep. And by leasing and getting that maintenance agreement, that also means I don't have to have a computer tech team on staff which saves on payroll. You might ask, well, why Mr. Big Shot Tom leases a computer when he could buy it outright. Well, the answer is I'm always looking for tax deductions and I don't care how much money I have. All right. I'd rather have it in my bank account rather than Dell's. OK. And we're going to get the tax ramifications shortly. Another big factor for many pieces of equipment is that it could become obsolete. If you bought the equipment, you're stuck with the old technology and little or no market to sell it to recoup much of your investment. With leases, you don't own the equipment and can turn it back in at the end of your lease period and let the lessor worry about what to do with.
[00:08:11] Here's another thing. Maybe your business is going great and you need a higher capacity piece of equipment. Well, many lessors would let you out of your old lease if you are leasing a bigger and more expensive piece of equipment off of them. So you don't have to try to sell your old piece of equipment to get the money to buy the new one. Also, if you ask, they would probably let you keep the old piece of equipment running while the new one is installed so you wouldn't have any downtime.
[00:08:45] This is the part you need to check with your tax advisor on. I'm contending that if you are legitimately in business and the equipment is absolutely necessary for you to do your business, that virtually all tax professionals would agree you're eligible for tax deductions with regard to that equipment. Now, whether I'm qualified to advise you of the best way to handle those deductions for your business, that's another story. That's your tax person's job to figure it out for you in your situation. Oh, and you might be wondering what exactly a piece of equipment is. Well, in general, it is called a hard asset. In other words, an actual machine like a printer or maybe a tire changing machine for a gas station or maybe a cooler for a restaurant. It's generally not something that is permanently attached to the building, which would make it real estate instead of equipment. And here's a story from my retreat center. So I have a built in hot tub inside the great Internet Marketing Retreat Center where I'm recording this today. I was getting some advice from an appraiser on things I could do to improve the property that would pay back well, value wise. You know, a lot of times you improve your property and you spend a lot of money on something, but you don't get it back when you sell it. So I wanted to see what things that I could do to improve the property. So if I ever sell or just thing increases the value. So I asked the guy if I should get rid of the older built in hot tub and fill in the hole in the floor where it was and put in a more modern portable hot tub above, you know, above the floor that sits on the floor. He said absolutely not. He said the built in hot tub was real estate and would substantially add to the value of the property. And the portable one would be personal property and not figure in at all to the real estate value. So that was a really great lesson.
[00:11:02] OK, so so you can see there are lots of benefits to leasing now, what's the downside? Well, in some cases, when you add up all the costs and possible mandatory maintenance agreements, it may make more sense and be cheaper to just outright buy the piece of equipment. Then what if you no longer need the equipment before the lease is up? Think about that. You're stuck with the lease and possibly maintenance payments. If they were mandatory on the equipment that you're not even using anymore, these are all things you've got to try to think out ahead of time.
[00:11:39] Another thing that could be considered a con of leasing is that you aren't building any equity in the piece of equipment and you can't sell something that doesn't belong to you to either recoup your cost and in some instances make a profit when a piece of equipment actually increases in value or at least holds its value. I was I was shocked. I have this 9 year old Mac Tower computer and had to be fixed and I took it in and they were like all oh and and on over it like it's worth like $4000 and is 9 years old. I think that's what I paid for it nine years ago. You can't do that. You can't sell it if you're leasing it.
[00:12:23] Another kind of leasing is that you are most likely prohibited in modifying the equipment to meet your needs. See, lessors don't take kindly to you altering their equipment and rendering it unleasable or unsalable to someone else when you turn it in or they have to repossess it.
[00:12:42] OK, let's talk about vehicles. With vehicles. We have to discuss closed and open end leases with closed end lease. The lessor will assume the risk that the vehicle will depreciate. And to reduce this risk, the lessor sets usually annual mileage restrictions and usually keeps the lease from between 12 and 48 months. So they don't get back a beat up piece of crap at the end of the lease and then have to fight with you over misuse or abuse of the vehicle and try to charge you more and get all that mess. And if you go over the mileage allotted, you pay a hefty premium like ten or fifteen cents a mile. Wow, that that adds up pretty quick. At the end of the lease, you'll have the option to purchase the vehicle at what they call a residual value or return the vehicle to the lessor. Now an open end lease that's more for commercial kind of vehicles and it allows you to assume you to assume the depreciation risk. This means at the end of the lease you can purchase the vehicle or pay extra depreciation to the lessor when you're turning it in. So if you beat up the vehicle and put tons of miles on it, oh, it's okay. But you will either buy it at the end or pay up for beating it up. All right.
[00:14:12] I want to tell a story about my leased Mercedes and how my dogs gave me a two week headache. But before that, let me tell you about what I did about 20 years ago to turn the Internet training world on its head. See, at that time, people like me were charging 50 or 100 grand upfront to teach what we knew to clueless business people who refuse to learn on their own. I'm a small business advocate. I knew many small businesses could never afford that kind of upfront money. So I made all those gurus mad by charging a relatively small entry fee to my program. That also got a percentage of profits that was capped. So you're not stuck with me forever. So for me to get my big money, you have to make way bigger money. Plus, you know, I'm not going to disappear on you because I won't get any of my money. So I even took it a step further and this has never been done before. Just talked on this episode about the great Internet market and retreat center. Well, it's a biggest estate home and a TV studio where my students, as part of their year training, come and actually stay in my house for an immersion weekend. It's really a life changing experience when people were here seeing a real live twenty five year, 26 year now Internet marketer actually doing their work and money coming in and going out and playing with the dogs the middle of the day. Who cares? Yeah. So so it's it's a really powerful thing. So read about it at greatinternetmarketingtraining.com. Of course, that'll be in the show notes. This is episode 235. Great Internet marketing training is the place that tells you all the details on the entry fees, how the thing works and all the perks that you get. It's very unique program by far. There's no question about it. The most long running, continuous running, most successful mentor program ever. And I would say most unique because of these immersion trips where you actually live in the house and that you get to use the TV studio and just all the great things we give, because I really believe in giving great value.
[00:16:31] So let me tell you about for about nine years, I leased a Mercedes sedan every three years. The reason I did was I wanted the tax deduction and I don't really drive that much, maybe nine, ten thousand miles a year. And I didn't want to be responsible for a $10000 transmission on a Mercedes if it went bad on me. So and guess what, I'd still be doing it today if it weren't for my protection dogs. So I kind of cheated for a year or so by putting my two German shepherds in the backseat of my Mercedes sedan, which is a major, listen folks. A major no, no. In a lease agreement, very seldom do they allow dogs. So I bought a big, tough dog seat cover. And but there's still dog hair everywhere. And the thing that pushed me over the edge was Abby would bark in my ear if anyone got near the vehicle. And literally I had a two week headache one time and almost blew my eardrums. I knew I needed a much bigger vehicle and I knew I needed to customize it for my protection dog company. So so it made sense to get another vehicle and purchase it. See, the leasing wouldn't allow me to put all these custom things in a vehicle. So I now have a suburban with a custom dog kennel in the back and a custom bumper on the front and a dual battery system and some other custom features. And also it's paid off. So no payments. And unless I wreck it, it'll be around for a long time because I don't put on a lot of miles and I take really good care of my vehicles. So in this case, it definitely made sense to just buy it. And I think I have about $70000 in it and it's paid off and it only has 54000 miles on it. And it's seven years old and looks brand new. So sometimes it makes sense to buy. Sometimes it doesn't. That's the things, like I said, you need to discuss with your tax professional.
[00:18:40] So. So there's your little primer on leasing. So review this and and the show notes and then, you know, think about a little bit and then talk to your financial advisor to see if any of this makes sense for you. And then check out greatinternetmarketingtraining.com, because it can really change your financial future and get you on a high level expertise in the Internet field. Plus, when you join the mentor program, you get a scholarship to my distance learning school. It's the only licensed, dedicated Internet marketing school in the country, and one guy joined a mentor program, gifted the scholarship to his daughter who after one month. And by the way, he spent $80000 on her college education and she was working some menial job. So he gifted this scholarship to her. And after one month, she was making eleven hundred dollars a month. As a side gig, two months into the school, she was making three thousand about three weeks ago. She told me she was making thirty four hundred a month. Last week she called me and said she just quit her crap job and she got four new customers gonna probably put her well over five, almost six thousand dollars a month. And she's still got like four months left in the school. It's so very powerful thing. So. So either join the school, join the mentor program, do something. But I want you living this kind of lifestyle, because the college market, they've been brainwashing you. It's so important. But Google and Apple, IBM, Bank of America and like hundreds of other companies, knocked out their college degree requirements because they're sick of having people that are good at art history and protesting and have no skills. My school can give you a complete high demand skill in six months or less. So it's very, very powerful. So call me. Check it out. But look in the show notes and you can go over there and get the school catalog and all this stuff. The actual address is IMTCVA.org. Internet Marketing Training Center V.A. for Virginia. But it's distance learning so you can be anywhere in the world that has an Internet connection and attend this school. Very, very powerful. All right, everybody. I will catch y'all on the next episode. See ya later.
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