Planning on building in 2-3 years, and I’m trying to decide which would be better:
Buying materials ahead of time for future use (I have a rough idea of what I’ll need) and stockpiling till I’m ready
Investing the money and buying materials when I need them. (I figure a CD can get me roughly 5% interest conservatively)
I figure either way, I’d still look for all the closeout items I can find to save cash.
Opinions? Advice?
Replies
Do you have the storage facility to keep all the material?
Yes, storage is not a problem.
Invest and look for deals, like windows & entry doors, when you can find them.
Your design can incorporate these big $$ items. The way lumber prices are, who knows what they'll be in 2-3 years.
Scott
Let's clarify "investing."
Since you have a distinct goal within a short time period, with the possibility of pulling cash out at anytime, your "investable cash" should only be invested within items that do not change in value.
Savings accounts, money markets, short term CD's &/or treasuries. Nothing that risks the possibility of loss to principal. No stocks, no mutual funds, no other realestate.
My vote would be to hold the cash and buy at opportune pricing. But remember - that requires absolute accurate planning and specifying prior to the purchase. You can't play that game of, "I'll buy the whole lot of closeouts and figure out a place to put them later." Those overbuys will take away whatever savings gained from the strategy.
And for the amount of cash necessary, you better play the "who's got the best rate game."
what happens if you buy a bunch of stuff and then have a change of plans? garage sale time.
i do think there are some items that a guy might buy and store if you find at the right price. osb is 5.00 a sheet,roofing shingles here are down a little at about 45 a sq for 30 year. i think they have a potenal to go up because of oil prices. romex wire has went from 20.00 per 250 to 100 and is now back down to the 70.00 area,who knows where it will be 3 years from now.
if i was looking at building 3 years from now i think what i would do is just buy here and there,maybe pickup a couple rolls of 12/2 wire next month grab another one.if you catch hardi board at4.50 a stick grab some ,so on. have fun shopping and learn about lowes 10 off cupons before you start. larry
hand me the chainsaw, i need to trim the casing just a hair.
Only if you are 98% sure that a particular material will be used, and will have gone up at a 5% annual rate (if you can really achieve that) plus a risk premium, since the downside if the unforseeable changes the plans. If for some reason you can't build then the materials will likely have to be sold for cents on the dollar.
You do have to frankly consider why you can't build now, and why you are certain you can build in 2-3 years. That largely defines the risk.
if you can find a good deal on drywall, metal roofing, metal studs, copper. I would think about it.
i agree with larry- buy now on necessary items, esp. where you can get a deal. Oil prices will likely rise, causing building materials to rise, and faster than 5% or whatever a CD etc can bring in, in this time frame. Copper, however, is expected to fall from its current astronomical high when the politcal situation in Chile calms down a bit.
Expert since 10 am.
Remember that materials with warranties usually start from date of purchase, not when you get round to using them.
2-3 years:
Invest it. You should be able to get 10-20%/year.
i'm buying dinner if you can tell me where i can get 20% with a good chance all my princibal will be there in 3 years. i don't even think the drug dealers will pay that!
let me know cause i'm all in. larryhand me the chainsaw, i need to trim the casing just a hair.
20% er's are out there, but they are woefully inappropriate for your plans. They do all kinds of tricks, sommersaults, and swan dives. But holding the prinicipal is not one of their good points.
IF you're gonna play this strategy, stick with money markets and short term CD's. You got too much planning to do to be playing other games.