View Full Version : Leasing my personal tools to my shop

10-22-2008, 04:13 AM
I posted this over on PM, but I want to get as many opinions as I can:

As I have mentioned in the past I am the Shop Foreman at TechShop Portland.

I am thinking of leasing out my personal shop equipment to the business. Some machines like my lathe would be pretty much off limits to all but the most trusted. But as for my mill, surface grinder, tool grinders, welders, plasma cutter, air comp, etc I am not too worried about. I would keep all my personal tooling in a locked cage. I would get permanent asset tags to mark my equipment.

Advantage for me is I get a lot more space to use the equipment, Its in a heated, clean shop. And I get a little income from it instead of sitting in my garage collecting dust. Also there would be insurance to cover the equipment in case of damage.

Disadvantage, some nimrod could damage something. It would have to be written in the lease that all damage equipment is repaired or replace at the shops expense.

Am I crazy? It sure would help the business as we are just starting out.

So if I did this how would I price something like this? Where would I find a contract that would cover all the niceties?

Mike of the North
10-22-2008, 05:04 AM
There is a web site called legal zoom, I have never went to it just heard commercials for it on the radio.

10-22-2008, 06:34 AM
they are your tools so do what you want. but i have been around enough shops and have seen how the company tools are use and missused. if you think you can take something in and then say don't use it think again.

10-22-2008, 06:37 AM
Am I crazy? It sure would help the business as we are just starting out.

I think you would be nuts to do it.

Forget the fact that I (as well I'm sure some others here) hold my tools and epuipment in such high regard that no one else touches them.

Unless you personally have a principal interest in this business, I would say no. They are a new start up and if they don't have the resources and financial ability to equip their own shop, that would raise a red flag for me as an employee. This is not the same situation as an auto tech that needs to have his own tools to do his job.

10-22-2008, 06:37 AM
First off, I'm pessimistic about the future for operations like Tech Shop.

When the place goes under (not if, but when) you may have trouble getting your machinery back. Landlord liens, lawsuits, etc, etc.

Is it worth the risk? How much income would you get? Why not just sell the equipment to them?

Forrest Addy
10-22-2008, 07:58 AM
Want good advise on important issues? Consult an expert. 99% of us here are NOT lawyers so our advice is most likely defective is some way.

Yours is a complex legal question where much depends on your state's concract law. Better get a good lawyer, lay out your proposal, and get an idea of the pitfalls. It will be the best $100 consult feee you ever spent if it avoids hassles should tax lien or assets seisure pop up.

That said, if you are personally attached to your machinery beyond concernes of traditional ownership, don't lease it. In a lease you surrender most of your control over its use regardless of contract clauses and yiour objections. They will be dismissed as niggles or gratuitous interferance. If you raise too much of a fuss and deny access to your equipment, malicious persons in the workforce mai inflict subtle - hell, outright - sabotage. Repair and replacement may be laggard and incomplete. Your remedy will be limited to good will and diligence and if that breaks down, litigation. Not a prospect for a faint hearted owner of pampered home shop equipment.

10-22-2008, 08:42 AM
Forrest's advise is good, but I suspect that it will cost more than that for a consultation. I have a friend who works for a film studio and also leases some specialized tools (foam sprayers and carving equipment) to them. He said that it is a royal pain and he does not know if he would do it again, and he leases the stuff for outrageous fees. My advise is don't do it unless these are junker machines that you don't care about. No matter what you do, they will end up getting crashed/abused/wander off and this will lead to bad feelings. And then you also have to worry about getting your equipment out when you leave the company or if they go under (who knows what will happen in this economy).

If you could pick up some chicom mills/drill presses/other equipment super cheap on craigslist or the like, you might be able to make money, but I don't see them surviving very long.

10-22-2008, 08:53 AM
Disadvantage, some nimrod could damage something.
??? A "nimrod" is a hunter. Biblical allusion.

10-22-2008, 09:34 AM
You have way more faith in the human race than I do.
Obviously you have not been f<(ked over enough in life yet.
Not even my dad touches my tools unless I watch.
But it is a free country, so it is up to you.
Just picture somone crashing your red 10ee.

10-22-2008, 10:22 AM
I wouldn't do it for the reasons stated and one other. Liability. If someone hurts themselves badly YOU will get sued. It doesn't matter what documents you sign, the user signs, or the TechShop signs. Realize it is IMPOSSIBLE to sign away liability. So in the case that someone looses an eye, limb, reproductive organ, whatever, ALL parties involved WILL get sued and YOU WILL have to bear the cost of defending yourself. That cost will be orders of magnitude more than the cost of your equipment.

10-22-2008, 11:25 AM
There are a number of good points in the previous posts.

What kind of money are you getting? I used to sell leases. A very rough rule of thumb was a 3 year lease was 5% and a 5 year lease was 3% on the NEW value. Are you giving then too good a deal? Why are they leasing used? Why aren't they buying new?

I assume your stuff is used. What condition will it be in 3 years from now? Who is paying for breakdowns and repairs during the lease. Will payment be withheld during breakdowns?

The greatest flag on this deal is that you not at ARMS LENGTH with the lessor. You won't be able to make the tough business decisions, eg sue them for non payment or pull the equip. I think you buying yourself ulcers.

10-22-2008, 11:39 AM
Jerry very very bad. Just go out and buy them some machines it took you years to get the machines you have. And if you do that it will brake you Hart if someone brakes something or that hard to find part walks off . It would be better if you just went out and bought them some machines that you have no attachment to . Ken

10-22-2008, 12:07 PM
yeah bad idea. conflict of interest, risk, and you may go mental cuz no one will treat them as well as you do. Then think what happens when a company goes belly, landlord locks everyone out, court appoints a receiver, no one gets anything until they've sorted it out, and they are in no hurry (as i once heard it put, the receiver wants to suck on the nipple until the mother and child are dead; very crude but realistic.) receivers are the worst parasites and make the wall street scoundrels we're reading about seem like mother Teresa. anyway, who know what'll be missing by the time you get them back. If there is insolvency you do loose control of the situation and machines while the receive sorts it all out and imo the jury is still out on these sorts of business models

If you believe in the business model soo much, put the equipment in on a different structure, like a lease or debenture secured by the machines and an equity kicker.....if you are going to help finance the business, make sure you are valuing the contribution properly; ie if you putting in the machines on a lease saves them equity which say expects a 30% return, you should expect more than say an 8% return (although its not apples to apples as one is secured the other isn't)

10-22-2008, 01:26 PM
I wouldn't do it,too much risk.It's hard enough to hang onto assets in a simple partnership let alone a lease agreement.

Plus the liability has got to be a bitch,my lawyer told me liability waivers are worthless.

10-22-2008, 02:07 PM
This has backed up my feelings on leasing my stuff...

Not gonna do it.

Thanks guys.

10-22-2008, 05:24 PM
IMO. Good decision Macona. I do not lend my tools to anyone; old shifters, screwdrivers and spanners excepted. Historically and generally speaking, on the odd occasion that I have lent tools/ equipment I have been disappointed by their lack of care for my property and general unwillingness to remedy any damage.
Recently, a mate approached me about borrowing my mig. I suggested that he could use it at mine and I was willing to help out but no way was I prepared to allow him to have it at his place. He was upset and offended(?). This is from a guy who regularly leaves his garage open and accessible when he leaves home. He has had stuff stolen/lost before and it doesn't seem to faze him..maybe he gets his stuff cheap.

oil mac
10-22-2008, 05:35 PM
Maconna-- When you said "Aint gonna do it", I breathed a sigh of relief, Some time ago a friend of mine over here loaned a lot of his good machinery to the firm he had previously owned good looking bridgeport, lathe pantograph engraver etc, He sold his firm to another couple of guys (he was to carry on as technical director) Gentlemans agreement, he wouldnt give them his trade secrets Went on holiday, came back things were different, __ Row, lawyer, locked out of his own factory, Was even lucky to get his pet cat out the door,they were going to get it destroyed for badness final story dismissed, never saw his nice machines again, I have lost/had broken/stolen, numerous nice tools in similar situation, glad you have decided NO, ,You are less thought of for being kind hearted believe me it does not pay!

10-22-2008, 07:16 PM
This is from a guy who regularly leaves his garage open and accessible when he leaves home. He has had stuff stolen/lost before and it doesn't seem to faze him..maybe he gets his stuff cheap.

he gets his stuff for free from trusting friends like you. :)


i agree with the rest, i think you made the right decision. i don't think i would let someone even use half my "toys" let alone stick it in someone else's business for who-knows-who to ruin.

andy b.

10-22-2008, 08:56 PM
I am a flight instructor. I often thought about, "What if I owned an airplane? Would I lease it to the school?"

The school I teach at now, I have tons more trust in, and would consider it a lot more, however the old school I used to teach at, no way in hell. When people use something they do not own, they do not respect it!

10-22-2008, 09:36 PM
When people use something they do not own, they do not respect it!

Very very true.

When and after I was an Apprentice, the Machine Shop Foreman refused point blank to have a "shop machine" for anybody and everybody to use.

His reason? "Everybody's machine is nobody's machine".

That was 50 years ago. I have yet to see him proved wrong.

In that shop, everybody was allotted (to?) a machine to use and look after. Abuse a machine and you were "out the door". The Foreman regarded all those machines as his machines. He looked after his people like he looked after his machines - almost like babies. Most of the section Leading Hands were the same. If the Foreman didn't think the estimates were reasonable he sent the estimates back to be re-checked. If he thought that someone had a problem that was affecting the work, he had a chat with them in private and sometimes sent them home for a day or two to sort it out (no pay) but he always "found" some "over-time" for the deserving cases when "things were sorted out". He was "let down" on very few occasions.

It was one good shop to work in. And, yes the work did get done - on time, on size and on budget and the machines were very well looked after.

10-22-2008, 10:33 PM
he gets his stuff for free from trusting friends like you. :)

Yes, I am his friend, just not a foolish one.

10-23-2008, 07:46 AM
I have been to auctions and watched the former owner see "his" tools being sold very cheap, and the money going to the bank. Sad thing to watch, a lifetime of tools aquired being taken from you and the robbery is legal.

10-23-2008, 09:51 AM
I must be one of the few exceptions

"When people use something they do not own, they do not respect it!"

If it's a borrowed tool, I try to return it in better condition than I got it.

Am I the only one?

10-23-2008, 03:05 PM
I must be one of the few exceptions

"When people use something they do not own, they do not respect it!"

If it's a borrowed tool, I try to return it in better condition than I got it.

Am I the only one?

I am also one. Besides people not respecting others items, there are people who are very respectful but simply are not skilled enough or are too ignorant to know better.
Case in point, an Indian flight student. Usually very respectful but has absolutely no eye hand coordination. They go out on a solo and try to land the airplane the first time. Their brain is wired for a step by step approach. Great for programming, not so great for flying an airplane where variables are constantly changing... Do you want one of them to fly your airplane?
Ever seen a C152 where the nose wheel strut was bent forward, not backwards on a hard landing? To be bent forward would require a massively hard landing on the MAINS to produce enough force for the nosewheel to be bent forward. Nose first landing would cause the nose wheel to be pushed backwards. Now, granted, this took a few hard landings to accomplish... Yes, a FEW. I guess the first hard landing didn't compute in her head that maybe she should abort...

10-23-2008, 07:15 PM
I must be one of the few exceptions
"When people use something they do not own, they do not respect it!"
If it's a borrowed tool, I try to return it in better condition than I got it.
Am I the only one?

No, you are not alone Lin. That is how I also operate . If I receive(wrong word?) a tool to use it is cared for as I would care for mine and I ensure that it is returned in a well cared for clean condition.
Thinking on, I am guilty of forgetting to return emails to friends from across the ditch.... and other places. I hope all is well with you mate. I have a couple to catch up on so I'll get my A into G asap.