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  • Hey all, just changed over the backend after 15 years I figured time to give it a bit of an update, its probably gonna be a bit weird for most of you and i am sure there is a few bugs to work out but it should kinda work the same as before... hopefully :)

Financing Scarlet (Or anything RED for that matter)

Carlos/Jon/Jake,

Just to shed some light on the whole "leasing" issue... we are not like Rent-a-Center and most certainly NOT a "cheesy debt based internet scam company." We offer business financing... commercial capital. We are a reputable financial firm and not appreciative of the bashing issued by Jon.

Lest I digress... equipment leasing is just one financial tools available to finance equipment. At the end of the term, equipment is owned free and clear by the debtor/lessor. The equipment DOESN'T need to be returned at the end of the term. We have been financing RED gear since 2007, financing production gear in general for 25-years +, and have many references from large rental houses- down to small freelancers (many of which are also members of this board). As one user pointed out, over 80% of American businesses lease some or all of their capital equipment. If the word leasing is throwing you off, let's just say financing... I understand leasing may have a negative connotation for some. We work with a variety of national and local banks we can utilize depending on credit strength, deal size, time-in-business and other factors. While financing equipment may or may not be the best way to START a business, one thing is for sure... it is an EXCELLENT way to GROW your business while still keeping your money in the bank (in case that major client decides to go elsewhere, or you experience some slow times).

If anyone has any questions about the equipment financing process (lease or loan), feel free to contact me direct (link to site provided on page 6 of this thread). I'll do my best to explain everything and sort fact from fiction.
 
Just an FYI... when we finance RED gear, we document so that the RED invoice is both SOLD TO you and SHIPPED TO you. This is rather than having the equipment SOLD TO us or our bank on the invoice. This allows for seamless upgrade opportunities down the road when new releases/upgrades become available from RED. If dealing with a finance company, make sure the RED invoice is SOLD TO your company to avoid problems down the road.
 
Jon Jones said:
Hey man, you do whatever you feel you need to, but I promise you that in my mind, the only place that matters to me, there is not one good reason to lease your equipment, when all of us are well able to work extra to pay cash for equipment. Ask Peter Jackson if he is leasing his 30 Epic's to make the Hobbit. Wake up son, never is it a good reason to throw money down the toilet just to have a camera for a month then give it back... Might as well go to Rent-a-Center because it's the exact same thing, except at least at Rent-a-Center gives you the equipment when your at the end of the lease. But it's still like 300% interest, which is stupid!
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Not necessarily. I leased my car... and then bought it. The financing in the lease was actually slightly cheaper than a straight up loan and I could walk away from it after 36 months if I wanted something else. My vehicle actually held its value so well that after I took the buy-out option I could have turned around sold it and paid off just about all of my interest over the previous 36 months. That was a case where the leasing company assumed the value would go down faster than it actually did.

I agree with many of your views on living free of debt, especially high interest debt but your assertion that leasing or financing is never a good option simply isn't true. Let me play out two business plans for you:

Let's spend 48 months in the lives of two potential Scarlet owners:
A) You spend 3 years saving $25k for a Scarlet. After 3 years, you rent it out on average 1 day a week @$500 for 50 weeks and you pay it off.
B) You buy a scarlet *now* you assume a 5% business loan and you pay . Now you rent it out on average 1 day a week @$500 for a year and you pay it off in 53 weeks. But you've only been at this for a year. Everything else now is profit! So for the next 35 months you make an additional $70,000 off of your Scarlet over the person who paid cash. If the demand in your market was there and you needed two scarlets and you could rent out two scarlets a week then you simply double the financing and you make $140,000. That's a bunch of ifs, but there are undoubtedly people who know the market and have a solid business plan where that makes sense.

This obviously didn't work for your personal finances because when you buy a new car or purchase something on your CC for yourself... you just end up poorer. When you're running a business, equipment isn't an expense... it's also your source of income. Now I say this as someone who has $0 in debt and paid for their scarlet in cash. But that's just because my scarlet is *my* scarlet not a scarlet I intend to rent out regularly. It makes sense a number of situations to finance because while financing costs you $$ over time, so does the opportunity cost of waiting to start a business. And if you started your business as an LLC and you structure it properly should your market dry up and your creditors come calling you can return the leased equipment and you're largely protected.
 
That sounds good Gavin, I'm glad that you are a debt free individual, and paid for your SCARLET with funds that were yours, lol. We bought our SCARLET for ministry purposes and will not make any money off of it in terms of renting or doing camera work for others, so you could say that it is a personal camera, bought just for us. We were unboxing our camera today at church and the pastor came up to the media room and saw it, and even with zero knowledge of RDC and products, just the simple look of the gear itself, and the fact that we had drawn a crowd, made him come up with all kinds of ideas that we can do with it. So when I get back from Mexico, we are going to start doing mini documentaries for the church, but not about the church. It's quite a secular project that I am extremely excited about! Our church is just a tad different from most though as we do things a little unorthodox. We have fight nights, and city outreaches that are phenomenal.
 
Jon Jones said:
We were unboxing our camera today at church and the pastor came up to the media room and saw it, and even with zero knowledge of RDC and products, just the simple look of the gear itself, and the fact that we had drawn a crowd, made him come up with all kinds of ideas that we can do with it.
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So it's marketing. Which is fine. To some degree my Scarlet is also marketing, it'll help me market my own talents and capabilities better. I would agree with you in a situation where your camera's profit year over year is less than the interest then the financing is an additional cost. But if you can make a 10% profit on your Scarlet in a year and your financing is 5% then you're making 5% the price of a Scarlet which is better than 0%.

In my situation, a lesser camera wouldn't do me any good. I'm in the odd category where the only other viable alternative is 35mm film or a $100k+ camera. And it's slightly cheaper for me over a couple years to own a $15k camera than to rent a camera @ $1500 a day. It's so close to being on the line though of owning/renting even a scarlet that I think financing would actually cost me more than renting on a per-needed basis. A scarlet is actually competitive with renting for the infrequent renter even with financing. So while I don't plan on renting my camera out, I can view every time I *don't* rent as relative income. So if I don't rent a camera 25 days a year then even with financing costs it would only take me 2 years to pay off $20k. If I paid %10 interest that would still only be $2k. Which means I would need to not need to rent 4 more times to have saved the difference there too. So I would call myself an edge case where I may or may not save myself 50 rentals by owning but I would still consider myself a good candidate for financing.

My point being, there is definitely a place for financing. And it's pretty easy to figure out. "Will I spend more on financing and depreciation than on rentals over the life of the camera?" And for a lot of people the answer is no but a one size fits all solution certainly is not the case here. I don't view it as an evil, I just include it in the price of an item when I buy it if I need to.
 
Thats cool man, just in my mind financing is never going to happen for me. I had my share of debt, now I live debt free, and I'll be that way until the day I go to sleep. I will never finance again, but hey man you can do all the number figuring you want, but it's not going to change my mind.
 
You should probably stop discussing business finance when you don't have a business that needs equipment financing ;)
 
Says the man with how much debt... Because I have ZERO debt. Business is personal, you may have a business but I still have monies invested, many, many, of MY OWN DOLLARS, not the banks money, not someone elses money.

And if your business has debt, then you have debt.

AndrewThomas said:
You should probably stop discussing business finance when you don't have a business that needs equipment financing ;)
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Jon Jones said:
If your company fails, then you still have to pay the bank... If you used the banks money that is. Thats what I mean, if your company has debt then so do you.
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Google "Corporate Veil".
 
Corporate veil is good and all if you have an incorporation. Which one of you guys have incorporated your business? Jim for sure, and maybe one or two of the older very successful posters on this forum. probably 99% of the posters here utilize a DBA otherwise known as "doing business as" or an LLC. Just try to not make your payment to the bank on your "loaned money" and see how long that lasts. You can't beat the risk factor, the, what if something goes wrong and I can't make my payment. People, mostly in America have this mindset that debt is good... If you borrowed money to acquire something, then that something is not owned by you, until you pay the bank the full monies owed plus interest for letting you use their money, end of story. It is owned by the bank. Now me personally, I own all of my stuff. Let the bank call, what are they going to say? I'm not saying anyone here is an idiot for taking a loan, I'm just trying to say that I am not going to do it, and if someone asks, I will tell them what I think, not what all of the lemmings think...
 
Jon Jones said:
Corporate veil is good and all if you have an incorporation. Which one of you guys have incorporated your business?
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The principle of 'corporate veil' applies to LLCs, S-corps etc. I would hope more than 1% of the people on here that are renting out their camera are some form of licensed limited liability organization. Especially people looking to lease/finance equipment for their business.
 
Jon Jones said:
Corporate veil is good and all if you have an incorporation. Which one of you guys have incorporated your business? ...
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When you are talking about providing services like production and renting gear I certainly hope most people have some type of incorporation/llc

I agree with you Jon

It's dangerous to risk your credit on a loan for gear

I think in particular, the Scarlet, while a cool camera, it's going to be a saturated market and it's going to require a lot of money to support the necessary accessories to rent it out successfully.

I bought the Epic as early as I could and it's paid half of itself just on my jobs and I've rented it out quite a bit on top of that but I had the clients looking for it.

Early adopters have an edge.

But I think it's fair to say that that edge comes from also having a client base.

A camera, a camera system, does not make a business successful automatically.

So, unless you have the business lined up for you and your scarlet a loan for it should come with a moment of pause.

You'll find yourself a lot more comfortable and happy with your purchase if you don't have a payment every 30 days looming over you.

Just my 2 cents though

There is no one right way in business and people should always follow their gut or it's no fun :)
 
Bro, I am college educated in economics and finance. I know what I'm talking about. And Gavin is right, it is a very good idea to utilize the various legal structures that limit your personal liability. And look at the most successful businesses in the world and find the ones that don't use many different forms of financing. Even companies with large liquid assets and cash reserves borrow money, especially when money is cheap like it is right now.

I'm glad you have no personal debt, neither do I. But business debt and personal debt are two different things. How many things do people go into debt personally to generate income? Very few. Businesses that can meet greater demand with either increased labor or equipment should consider borrowing money if the expected return is high enough. When money is cheap and inflation is fairly high (like right now), you are practically stealing from the bank.
 
If the question is, 'With little or no industry experience or a regular wage, should I borrow money to buy a camera that I can't otherwise afford?'. My answer would be a big fat NO.
I think there are two points in time when it's right to buy kit with credit:
1, if you are turning down jobs coz you don't have the kit the client needs you to own to work with you.
2, if taking those jobs means hiring kit in so regularly that you would be better off owning kit and taking that hire income for yourself.
Both of those scenarios mean you are instantly bringing in more cash than previously and both mean that covering the loan is not a problem. I'm not saying that you should only buy kit if it turns you a profit, but it MUST increase your earnings. Otherwise you are better off having lower liabilities and looking for more work.

I would also say that your CV and experience are what make you worth hiring, not your camera. So is a RED the appropriate camera for you with your current experience? Or are you just as likely to get those jobs if you own a cheaper camera?
 
JustinC said:
1, if you are turning down jobs coz you don't have the kit the client needs you to own to work with you.
2, if taking those jobs means hiring kit in so regularly that you would be better off owning kit and taking that hire income for yourself.
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I Absolutely agree with Justin. And I pose the question: If you have enough jobs coming in that you are renting a camera all the time... is your rate to cheap then to buy one cash after a few months? Are you spending unwisely somewhere else? I think the best thing to do is always buy with cash. Period. Budget yourself, charge what your worth, and be patient. I am telling myself this just as much as anybody else.
 
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