Resale value as a function of purchase price

[JFoy]

I'm a little late jumping into this conversation but when I was looking to buy, my wife insisted I consider resale value as she had doubts I would use a tractor. Boy was she wrong! When I got my BX25, something woke up inside me and I went nuts using the tractor and still do.

I have considered buying a bigger unit and my local Kubota dealer said he would have no problem reselling mine. What stopped me from upgrading was the price difference as I was thinking of adding a cab on a B series which would have jacked the price up substantially.

 

[check]

I'm a little late jumping into this conversation but when I was looking to buy, my wife insisted I consider resale value as she had doubts I would use a tractor. Boy was she wrong! When I got my BX25, something woke up inside me and I went nuts using the tractor and still do.

I have considered buying a bigger unit and my local Kubota dealer said he would have no problem reselling mine. What stopped me from upgrading was the price difference as I was thinking of adding a cab on a B series which would have jacked the price up substantially.

Hey, same thing with me! I’vI bought a BX25 in 2008 and had no idea I would use it so much. And, I did consider upgrading a few times over the past years, but it really isn’t worth it if I have to pay as much to upgrade it as I did for the original tractor!

The BX25 is an amazing machine, and I will likely stick with it until I kick (in which case all my jealous neighbours will come after it).

 

[4570Man]

OK, I can see where you are coming from. It's a common misconception, but truth is that those aren't interchangeable terms. That's why we've been discussing pros and cons of older commercial machines as an option in this thread.

You aren't alone, though. The mistaken idea in the tractor world that "used" means "junk, repairs, & problems" became popular about 20 years ago.....perhaps as a result of some clever advertising right about the time that millenneals were reaching young adulthood. It was also right about then that the digital world began to replace the old style more mechanical world and that figured in as well.
The result is that equating older with less reliable in the tractor world has become a common misconception with today's buyers, and that mistake has persisted long enough so that today it has become "common knowledge" in spite of whether or not it is supported by fact.

One fact seems clear, and it is that tractors all seem to last far longer than anyone had expected, whether in homeowner service or ag/commercial. Hard work just doesn't hurt them, although of course outright abuse does.

That's what we were discussing. Given a tarp for cover, routine maintenance, and not too much abuse, tractors just don't age as much as manufacturers would like you to believe. And that's even more so for the larger commerical duty and farm tractors. Around here I know at least a dozen machines in every type of use in spite of being 30+ and all having 5K to well over 10K hours. Frankly they don't seem to have any more problems or need any more repair than brand new ones.

There just isn't much market for the larger used equipment, so your dollar goes a long ways in that market compared to compacts. That doesn't mean "tools of the trade" are the answer for everybody, but that might be more about how they are equipped to work rather than their reliability.
rScotty

Older tractors are a lot better for wear than old full size backhoes. I don’t have a bit of use for a backhoe older than the late 90s. There might be 5 in the state that’s not worn out junk. A $7500 backhoe could double in cost real quick.

 

[mred2]

My brother-in-law got an old ford backhoe. He drove it home, had to stop every couple of miles to put water in it. Got it home, new water pump, hoses, and more problems. It was a good buy, but has spent half as much to keep it running as he paid for it. My problem would not be the cost of the parts, but the time it is not working. The main reason contractor buy new is due to the cost of the down time, lost of income. Some hobby farmers just don't have to work equipment that hard and have a lot of time. I may be a hobby farmer, but I see my time as important and limited. I don't want to spend the day fixing equipment or waiting on it to be fixed. Staying a little on subject, I see that being a part of resale. Resale to me, might be a lot less than resale to someone a lot younger. Current market sets the resale, and I don't know anyone that can see the future to what it will be in 5, 10 or 20 years. Just a good guess.

 

[rScotty]

Older tractors are a lot better for wear than old full size backhoes. I don稚 have a bit of use for a backhoe older than the late 90s. There might be 5 in the state that痴 not worn out junk. A $7500 backhoe could double in cost real quick.

That may be true where in your area, but that doesn't mean it's the same everywhere. It's not true here, so that kind of blanket statement just doesn't do justice to older machinery in the western US. Maybe it's the dry climate here. Whatever the reason, I see plenty enough good older machines even if they are sprinkled in with a sea of junkers. Just because there are a lot of junkers doesn't mean the good ones aren't out there. And there sure seem to be enough good ones for anyone who wants one. But you do have to avoid the junk.

The trick to buying old machinery is to convince yourself that by looking at older used equipment in the first place you are already saving plenty of money on the price.

And then since you are saving so much already, don't look farther for a really low price. In fact the "trick" is to look for the most expensive old machine in whatever category you are looking for, and then ask the owner to prove to you why it is that HIS old tractor or TLB is worth more than the others out there. If it's a good one, the owner will can probably tell you exactly why. In fact, he will probably be tickled to find someone who cares. And then you get a great deal on a reliable machine at great savings.

By the way, when looking at older machinery age and hours don't matter as much as overall condition and maintenance. Keep in mind that an old engine machine - well cared for - tends to be preferable to even the best rebuilt.
rScotty

 

[rScotty]

My brother-in-law got an old ford backhoe. He drove it home, had to stop every couple of miles to put water in it. Got it home, new water pump, hoses, and more problems. It was a good buy, but has spent half as much to keep it running as he paid for it.
(SNIP...)
My problem would not be the cost of the parts, but the time it is not working. The main reason contractor buy new is due to the cost of the down time, lost of income. Some hobby farmers just don't have to work equipment that hard and have a lot of time. I may be a hobby farmer, but I see my time as important and limited. I don't want to spend the day fixing equipment or waiting on it to be fixed.

I'd see that and agree with most of it. As to that old Ford your brother-in-law bought, I've put my opinion about buying old machines in post #75 - it should be the post right above this one.
In short, when buying old machines, I think it always pays you to pay top dollar to the owner and get a nice one instead of a junker. As a buyer of something older, you are already saving most of the cost of a new machine. Don't try for the cheapest example. Go the other way.

Maybe I've just been lucky. But I just haven't found that older machinery has any greater downtime than newer. You'd think it would, but that isn't what I've seen. But then I only buy good old excellent condition. Never wanted to buy a junker - that's an obvious money pit.

Like a lot of us, I mostly do a little farming and landscaping as a hobby on my own land. It's all part of the hobby for me - getting the tools, using the tools, and maintaining the tools. Yes, even writing about tractor time here on TBN. Same thing...
I also see my time as important and don't see my time as being wasted or limited just because it's a hobby for me.
Stacking rocks to make a rock wall, or changing a water pump....it's all part of the same hobby.,

Anyway, that's how I see it - and it probably also explains why I like old equipment just as much as my new equipment.
rScotty

 

[paulfun9]

Percentage isn't 'the' thing to measure IMO.

If you buy a 24k kubota and it's worth 80% of that is 4 years, it cost you $4800 to own it.

If you buy a kioti or RK say, for 20k, and in 4 years it's worth 80% - same percentage - it cost you $4k to own it.

20% less. A significant sum.

Even if the kubota is worth 85% in 4 years, it cost you $3600 - less costly than the kioti or RK on the face of it, but if you financed it you may have spent more on the finance charges on the higher priced unit at purchase.

Another factor is how quickly you sell something - a kubota or deere will sell faster than other brands due to recognition of the brand, consumer confidence. Is a belarus or iseki a better buy, retain value better? I don't know, but I bet if you're selling one you're explaining the brand a lot more than a kubota or deere seller would be. But then that's likely why K and D can get a premium price on their stuff - name/brand recognition and trust.

If you paid 4000. More at the start, what that money could have done or earned by using it for other things must be computed into it. Simply using the amount the machine sells for as being higher does not justify having to lay out more at the beginning.

Paying 4000 less at the start means that I have already saved that much and was able to buy more attachments, invest in other things which for most of us with a tractor means we can earn more money in that 4 year time frame or make money on an other investment that will grow. When this fact is considered and calculated to the estimated 800 more you get during resale of the Kubota. Simply stated I would already be light years ahead and the actual amount would be very hard to figure depending on how that initial 4000. was used.
Even simply figured I spent 4000 less to begin with and kept it under my mattress for 4 years And at sale time pulled it out and added it to the money received from the sale I would have 20,000 while the kubota owner having zero to add would have only 19,200. Clearly the Kioti or RK has a better resale value when the end result is figured properly based on real life numbers rather than a play on percentages of an unfinished math problem. Now spend some time doing the math with interest rates figured into it or the higher cost you would have paid if you took the zero interest route at the start and again the Kioti or RK would most likely end up being the better buy not only at the start but again at resale.

 

[ultrarunner]

I'm simple when it comes to economics...

I "Invest" in real estate and play with collector cars...

Don't have money in the market and we all know what CD rates have been for a very long time...

A known quality product with wide distribution improves resale...


I grew up around the auto business... foreign lesser known cars had dismal resale... sometimes making them a great value second hand..


Just look at the prices used for Honda and Toyota... hardly worth it when you can bargain and have incentives new...

Contrast that to buying a new Fiat... resale is the pits.... either drive it into the ground or take your lumps selling.

 

[paulfun9]

How many parts, cars could you move making profit with 4000. Compared to zero?

Having an extra 4000. To add to the next real estate deal opposed to zero means what ?

The fact is the resale value of the Korean tractors in most areas is very strong and right on par with the Kubota is some. The example given early in this post showing it to be only off by 5% is not unrealistic and in many cases it’s the same.

 

[Steppenwolfe]

Not sure if that means much. You got lucky? The buyer was an idiot? I would never buy a used machine unless there was a significant price difference over a new one. But that is me and why it took me so long to acquire a tractor.

BTW, as another poster stated, a lot depends on how talented someone is. I can do minor stuff but that is it. I need (want?) dealer support and a warranty. So buying used is not for everyone.

I paid $3500 for my machine (came with turf tires, MMM, FEL, brush hog, tiller, rake, boom), then bought a blade, spare set of wheels and AG tires for $200, and have spent $2500 so far on repairs (dealer did all the work so a lot of that was labor costs). I have a 30 year old tractor (1100 hrs) with attachments for less than $6.5k. Probably not a good choice if I was planning to put 250 hrs a year on it. But I will likely use it 50-75 hours a year. If it lasts another 10 years, and is worth $2.5k, my cost will be $400 per year plus oil/filter changes and any other repairs. The "other repairs" are the unknown and what may bite me....that is the risk of buying used or owning anything out of warranty. And as has been mentioned by others, with older machines, parts may be difficult or impossible to get.

Having the tractor now, I regret waiting as long as I did. I should have bit the bullet and bought a new one 6 years ago. At my age (now late 60's) it would have lasted my lifetime and still have retained a reasonable value after 20 years. My cost per year would have been about $1000-1200 for a better machine. And I would have less risk of "other repairs" as I take care of my stuff and do not abuse it.

So, who's the idiot ???