Top 3 Costliest Mistakes When Buying a Modular Classroom

Mistake # 3: Rent vs. Buy

Most schools significantly underestimate how long they will have their modular. This common mistake tilts the “rent vs. buy” calculation in favor of the rental company. 

The “break even” point on a modular classroom lease – the point where the cost to purchase is equal to the cumulative rent payments – is usually 4 to 5 years. But industry statistics show that 80% of schools retain their building for at least 2 years beyond the original lease term! That means that a 2 year lease has an 80% chance of becoming a 4 year lease!

Bottom Line: In the end, it is almost always better to buy than to rent!

Mistake # 2: Neglecting to “Lock In” a Buyout Price

Maybe you read mistake # 3, but in your case, it still makes sense to rent. How do you protect yourself in the event you need your building beyond the original lease term? Lock in a buyout price!                         

Only 5% of rental customers ask that a guaranteed buyout price be included in the lease. Down the road, after several years of rental payments, you might start thinking “We should just buy this building.” A call to the rental company for a buyout price reveals an ugly truth – the rental company now has you over the barrel! Why? The total cost of any competing offer must include removal of the existing building, and delivery and set up of the replacement building!

Bottom Line: If you must rent, lock-in a buyout price in writing before you sign a lease!

Mistake # 1: Waiting Too Long to Place an Order                                                                    

There is a saying in the modular classroom business: “You can have it done fast, you can have it done right, and you can have it done for a reasonable price… But you can’t have all three!”

The modular classroom industry is a seasonal business. In a typical year, 87% of modular classrooms are installed over the 92 days of summer – June 1 through August 31. Schools that sign contracts in January and February typically pay 15% less than those that sign in March and April. By the time May rolls around, most modular companies are almost booked for the summer. The prices for those last, few, precious slots skyrocket! May and June contracts will typically see another 15% to 25% increase.

Bottom Line: Plan ahead, and be prepared to accelerate your decision making process to maximize your savings!

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