How to charge on tools/equipment with different partnerships?

[Becky Hiu]

Big dilemma on best practice or most efficient way to charge "rent" on tools/equipment that one partnership owns that will be used for remodeling/maintenance work on other partnerships with different owners. Let me rephrase this: we are doing mini-BRRRR on the new partnership's property but the tools are owned by this partnership of 4 - not just maintenance items. And, what are "market rates?"

Scenario: I am part of 4 different partnerships of which one is a property management company we recently started that hires labor (in-house construction workers - we have 1 full-time and 2 part-time guys) and owns equipment/tools. There are 4 members in the property management company and we just created a new partnership with a 5th (same 4 other partners, 1 new partner) to own a 15-unit we are closing on next week. 

How should we go about charging this new partnership of 5 (15-unit investment) tools/equipment rent? We brainstormed several ideas such as identifying useful life in hours each tool/equipment that costs > $100 and charging per hour "rent" when used but this gets more complicated the more tools we will be using (we likely have $15-20k in tools and equipment), OR we should just tack on a "rent" charge of say $10/hour on top of the labor wage we're paying our in-house construction workers (for e.g. $20 base/hour + $10/hour for equipment "rent") but this $10/hour is very arbitrary number (could it be $5, $15, $20?). 

Thoughts, anyone?

[Mitch Coluzzi]

I don't want to be dismissive, but $15-20k in tools is not enough to be dissecting useful life and brainstorming compensation over when 80% is affiliated ownership.  If you're adding people to a business model (person #5) they should be buying in for an equivalent percentage and bringing something to the table... Access to the relatively small asset of another business is a part of the bargain.  Consider it like the existing partners are bringing contractor contacts (their other entity) to the table.  It's no different than me hiring ABC Plumbing to swap a water heater, minus the affiliated business relationship.

That said, the services rendered by entity A for new entity B should be accounted for in the form of inclusive services... services need to be costed, warranted, insured, and held to the same standards you'd expect from a non-affiliated contractor. 

Keep It Simple. Entity A in this case needs to charge a market rate and provide a market service.  Entity B might have shared ownership but it needs to be treated as a stand alone entity.

Bill it out as a service or hire a 3rd party entirely...  don't waste time with the details of tool rentals, etc.