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Electronically signing construction equipment lease proposal template

alright guys welcome back some are helping calm we've got an equipment rental business a little bit of background equipment rental no matter what you're doing this basically a cash flow business you buy equipment you rent it out you don't have much operating costs your main concern is that and you know getting people around your stuff also keeping it legal you know insurance paperwork all that good stuff but what I built here is a really really good cash flow financial model for an equipment rental if you're starting up and it's really late on Sunday night so I'm trying to get through this I really don't want to I want to you know really explain everything about this model because it's probably one of the best I've ever done I really like how it works so I'm going to try to get you guys so you can see it working in action okay so equipment rental number one I'm just going to walk you through how the whole thing works because that's the easiest way to explain so well you got to have some equipment right here I've listed a hundred possible equipment um pieces equipment to start and this can be easily expanded to thousands of pieces of equipment if you had it without a problem but I just started with 100 because this is more geared towards someone just looking to start up a business now one of the most important things it's number one make sure you have the demand for the equipment don't buy a whole bunch into equipment and hope you get demand for it if not then you got to figure out how to get rid of it you lose money you got assets that drown doing nothing so you want to buy equipment as it is needed and you grow in that manner so what that means is the model has to allow you to enter various months where you start buying equipment you're not going to buy it all at once so we're not really going to have a nice like internal rate of return calculation but we're going to have some really awesome cash flow insights over time from this it's really nice so what you can actually do is put in the cost of the equipment the date you start and the date you you know get rid of it and there will also be establish values that you can put in so let's just say you know I just got names here and if you change your name in the equipment item column it will propagate through the model and the individual line items on them monthly and annual summaries so let's just build a little I'm going to build a little scenario that I'm just going to experiment span it out let's say this is not immoral let's say this is a dump truck and it's going to cost you I don't know how much is a dump truck let's say a nice one I use one I'll say 250,000 okay and we're going to start it right on the first month that we got and this will allow you to pick any month within the ten year time frame this model is a ten year so we're going to pick the first month of the first year and then now we have another dynamic function you will be able to pick by year the average amount of days you expect the equipment to be rented out per month so let's say year one you average twenty days a month your 225 and then you got up around 28 and you hung in there at about 28 for that a month meaning is basically utilized 95% of the time now that might not be the case whatever your research shows with your Barca and whatever dollars you have you might have a different number different numbers in here and that's fine that was all the reason why it's built like this is to give you complete control in dynamic functionality okay so we got a dump truck you see dump truck yep it has updated right there now how much are you going to charge usually rentals it's a per day so for the purpose of the model we're going to say if we rent it out to somebody you know let's do $250 a day now let's knock it's going to matter more if you're trying to pay back that but if you just all cash then you know your main concern is you want people using it so maybe you lower your prices it takes you longer to make money as much money but you don't have to worry about debt service or you know pay back loans which is it's a huge part of the equipment rental business because you're it's pure cash flow your cash goes out to get the equipment and then you slowly bring it back in with renting so let's say at 250 they we have running cost here I've done repairs and maintenance as a percentage of the total active assets which is one percent so let's say you if you had a hundred dollars worth of assets this is saying every month you're going to pay one percent of the total asset value for repairs maintenance now could be different but that's a pretty good number pretty good field to use percentages in so you can estimate then you've got all your regular operating costs like legal accounting utilities rent off or your office or buildings for storage just general and administrative and then all these other costs that you might have so let's just say G an a to 500 a month pretty small operation we got going so far legal say a hundred months and accounting 201 --the utilities 250 a month yeah so 150 not you know yeah you know how much there's not that much running cost to this or even cost of sales your main expenses is going to be your debt and if you don't have that then your main concern is how fast can you your money back from the cash you just put out the rent let's say rents on 1500 a month for your office then the rest of these expenses just to show you that they will propagate through the model just put a dollar in there all right so we've built our initial business no debt at the moment one piece 2n $50,000 bit that were renting at $250 a day so let's quickly look at the monthly annual so the monthly is going to show you the dollar amount of your revenue per item all 100 items here it's going to be time based so you see this starts in January if I were to switch the start date on this to say May you can see I look at that the revenue doesn't start until May so great that works so there's a revenue per equipment item rental income we've got the total rental income then we have all our operational expenses like I said the repairs or maintenance general legal it's all pretty cut-and-dry here our net operating income or Eva's off and then here is the important part we have Rho 133 which is non depreciated a savelii so this is taking into account all equipment purchases all equipments they've been discontinued which means if you put in the end date and let's say we do it and one year just to show you the functionality you can see right there popped in it closes out January of 18 as a - now that's not going to affect the cash flow what will affect is if you put a salvage value in here or say thousand dollars you see the numbers update down here if we just have nothing there then each year monthly monthly cash flow at three thousand seven ninety if we put in as a thousand salvage there it goes to four thousand seven ninety so this is not really going to be for reporting for accounting purposes but the main thing you would use this model for is to check how you're actually doing versus what this model was that you built so this is like your forecasting and budgeting so you might want to have two copies of this excel sheet up at once once you're the model act and another one is where you're actually putting in real numbers and you see how you're doing and then the model itself will help you project you know your cash needs given your scenario alright so again that doesn't affect cash flow you can see the writing position it didn't change much from here here well probably changed about whatever looks like our revenue went up Junior of eighteen Oh because we went up to 28 days from 25 yeah that makes sense and I'm glad that's work in so running cash position again this is not going to affect it you see we're from Nate 49 in exit 245 after that months and there's no debt service at the moment when we I do put in the debt service you actually actually be able to dynamically see the monthly debt payments on it for different loans starting at four different times so you can see here months of financing you just pick the month let's drop down you pick them out financed the loan term the interest rate based on this information you will then have that servers populating so let's just say we finance the whole $250,000 of that equipment item on a 30-year loan at 5% interest you see there we now have a debt balance you now have that service here at 1300 months and how is it LS negatively affecting our cash flow till we hit positive a layer so what the current usage we've got six thousand two hundred fifty and I've got groups here so we could kind of show the revenue and costs all in here so if you can see in January of eighteen we've got revenue of 60 to 50 cost of 24 or equal to three skirts out so ninety that's basically what we have left over pay for anything else like depth we have um we've now put this out out of service we have and note this is important if you do take this out of service that we say here we did it in year three you would then want to put zeros after that so if you don't if you're discontinuing an item make sure you close out that item and actually a price you put a function in here because you won't always be closing out you know at the exact end of each year so one second I'm actually to add functionality so whatever you put in here is a date the revenue for that item will then no longer populate standby okay there we go it's fixed so you can see here we now no longer have revenue if we discontinued item which makes complete sense and now it's not the annual basis it can be granulated as far as monthly let's say we put this all the way out to February 20 2020 you can see now this should have revenues yeah even us up to 2020 and then you see the may see February it goes from positive negative which means we should have zeros up here perfect okay so the formula is working we only have one item at the moment okay great so that it looks like everything's working excellent now the nice thing look at this we have visuals now obviously this is negative because we stopped revenue midway through so let me just put this back I've added one month to the ensel and if you pick that it goes into the full ten years and here we go so interesting right here now it says our outstanding debt you can see it's going down slowly 30-year mortgage the darker shade is our revenue or running cash position getting up there that 50,000 then we have non depreciated asset value which is just 250 at the moment nothing's changed there we've got rental in income you can see the step ups when we add days utilized the expenses are the same because I just made a little same for every year profit margin same kind of as follows the same kind of deal as the robot rental income because our profit margins are going higher as more days are utilized for rent mean then we have a same chart but on an annual basis this is the profit margin then we've got rental income versus operating costs then we've got cash position to debt and you can see that that or the cash position a little bit better there see it's only go off about $8,000 a year that that's going down about 5,000 a year so you pay off your loans you're still building some cash or making money but the equipment is quite a bit now let's say you have 200 125,000 so you only want to fund half of it so let's say we only finance half here now let's see how this affects everything well you're starting more negative because you actually don't have the cash to cover the cost of this asset and that's where this negative 1/25 is telling you well yeah you don't have enough money to cover the debt service or you don't have enough money to you know you have to this is sane the loan that's not covering all the money or if you have a zero in the loan you can see this would just go to 250 if we make the loan zero to forty nine nine sixty because you got $40.00 of income in the first month so the same either one way or the other you got to either financed earn fifty thousand or you got to put it out of pocket now if you do put it out of pocket you could use the salvage a you manual input to put that there so let's say we did put 250 thousand now our running cash position is basically just um the Ebola and the reason why is because we all have any debt we put up all cash so now you can see well it's going to take you the full ten years you still won't you'll be two hundred nine thousand dollars so you still haven't paid yourself back completely and here's a better visual of it on the annual side because that is not because this is manual here so the annual I would not put that 250 in so the same start a negative which you might want to just do that if you do start a negative it tells you when it gets to zero well that's your breakeven on your you know on the whole business so maybe we just leave that like and same deal here on the monthly let's start adding so you can see how nice this is if you have a really good plan you can figure out you know what revenues you want to charge let's just start add in some stuff you let's say we have you know $25,000 mowers a couple of these some tractor 450 thousand couple of those and let's say they start day is we're going to go May then August I'm going next year moire Pro was it equal June and let's do another June 18 for the rest of these and we'll say you know we'll say there even just half utilize let's just do 15 days a month don't want that the pole and this is just manual input but I'm just using some formulas just to make it go quicker for myself um so say we're using them half the month we're all going to full ten years and start dates let's see how the annual looks actually let's just look at the visuals well now well is low and that's because we're not charging enough while we haven't even put any numbers near so for the $25,000 mowers let's they will charge a hundred dollars a day for those for the tractors a little bit more we're not going to double bowls charged a 150 for those and now for that we go to chapter five I think director for running costs there's basically one variable running cost the rest of everything is it is fixed all right now what are we looking like okay there look at this so we're getting down to the most cash you would actually need to put into the business if you had to put out of your pocket is 500000 the first couple of months you're looking at about 250 to 90 and that means you're they're gonna have to get financing or you put out a pocket now if you put out a pocket you can see your breakeven is assuming you start with all the scenarios in January or 17 your breakeven is right here around what is that January 20 2021 and then your cashflow positive you've made your money back there's asset value you can see as they kind of go up and then we stick there because I there's anything down the road profit margins now here's interesting you see it on an annual basis right blowing over its operating expenses cash position to debt no debt so there's no debt marker there and then profit margin on an annual basis so let's look at this so we got a our chart says we need about four hundred ninety-eight thousand but now if you think about that if you add debt your cash flow is going to be a little bit less because you also have to pay the debt service so let's go ahead and see if we use now we can stagger these two so let's say we do 250,000 and then once our next big purchase in June of 18 so let's make June of 18 the next alone you see how this goes and now how much did we purchased there two hundred twenty-five thousand okay so we've got now let's check it out yes that's a nice nice chart that actually makes sense so there you can see we're slightly still in the red we actually don't have enough cash for fifty nine thousand in the red you see in 2018 negative to twelve running cash position what we got here net operating income on 14 so look at in 2018 let's check this I actually didn't run this check out running cash position or get eight four five two now what is off about that now that should match so let me check standby right okay got it so the annual P&L the the funds from financing what you can see here is pulling whenever there's a finance amount the population here well the annual pre now the formula was not updated so now it is so now you can see it makes sense that our lowest points they get a forty nine thousand so we actually did not get enough financing we still need to either put more of our own cash in or get more debt so let's say we do to do two eighty and still negative what are we down forty nine oh right because that's the first one we don't actually need more here we need more in the first initial deployment do two ninety almost it's negative eleven thousand could have debt service of eighteen thousand is just hurting let's try three hundred and there we go I think we did it so you really eat have to put in 2,600 bucks zero morning but you're also paint you know this is assuming you're making you know your your revenue is seventy nine thousand your expenses are 62 so you're taking in sixteen thousand from that 16 you got to pay out nineteen in debt service so there's where the makeup is now the next month a little bit more revenue 114 thousand because we've now started a couple more up like pieces of equipment again these are only half utilized at the prices I says that hundred bucks you know like your armor to the higher box 150 now we only utilized all these for half of months and now at 198,000 in revenue we got rain costs at eighty three most of us just repairs and maintenance maintenance that might be less - probably is going to be less on that amount of equipment but you never know I don't really know you'd have to be the key is the functionality is there so if you're looking at the construction business you will know those numbers and can plug them in where relevant the key is that you can actually plan it out and see the effects of cash flow all right so one 214,000 we're purchasing 250,000 but we also have a finance come in that year zero to twenty five we've got a little bit more debt service for the second loan but now look that's over thirty one our cash flow is positive fifty eight because we had enough operating income to cover all of our new debt and we find this enough to purchase a new equipment and now it's cashflow positive from there so you can see as we're going forward in time throwing cash balance getting higher and higher again you can see with the visuals in there the running cash position against the total debt now I thought this is interesting I put total debt position as well now why in 2019 is that higher try to see if that makes sense 2019 let's Orson 18 why is this coming in oh now here well here's a little bit of a discrepancy so and it's just a formula it's just the just how it kind of works is it's looking up the first day of the year on each of these so in 2018 in January we actually got this loan out in June now if we put this back to January you would see within coming in 2018 and then you would not see you see the spike in 2018 is the 19 but the key is it's a really it's the closest you're going to get to projecting out cash flows with such dynamic capabilities I mean I really like this cash position to that position here on the monthly that's a really like a good view of what is going on on a consolidated basis with dole business you see 1 2 3 & 4 these tabs all just have the amortization schedule for all 4 loans let's see the visuals monthly make sure this is at the top and expanded I think we're about there and hopefully I haven't done this much of a disservice because I'm feeling on the weather and it's late on a Sunday night but I've worked on this thing a lot today and I'm pumped that it is where it is and it works as it does because this model is just really one of the best ones I've built it will be an upper tier model 100% there we go Snell ten years fit without having to move cursor over and I just I'm pumped about this thing it's awesome hopefully we'll be - and if you want to purchase a template you just go - I'll have a link in the description box below helping calm right to the page where you can purchase it if you do so I'll send it right to your email probably within you know five to ten minutes and I will fix any errors or any logic that needs fix that's not correct if you find it which I've just tested it a pretty extensively here and it saves you worry I fix for free any extended logic that you want that's outside of the scope I'll just charge my normal billing rate of forty dollars now or if you want me to do that so am i clear well now I'll leave some of this I'll leave this in here so the actual default template will have some figures you can clear them out when you get it but you may want to have them in there just so you can see how it works all right that's what I got for you and this is the equivalent rental financial model cash flow intensive insights I have a great start of your week