Hey Fellas,
I've reached a cross roads. My wife and I have been saving for a while now to hopefully
build our new home. We have the money saved, it's just a matter of when we pull the trigger.
My wife wants to start ASAP. I, on the other hand, am a bit gun shy. Things suck in the economy,
the situation in the middle east is deterorating under the current administration, oil prices are
rocketing. Not to mention the stock market is on a high, I see that as a sign of a coming collapse.
I want to hold off and wait a couple years, but on the other hand building materials are at a record
low cost. And the contractors I am talking with seem to beleive that now I can get the most bang for my buck.
We are building a home designed with ICF, Insulated Concrete Forms, and encoroporating
a metal roof and some solar panels for the long haul. This should prove to be a very robust and sustanible structure.
I am just worried about draining the fundage, not to mention my preperation budget will be slashed.

On the other hand, if a collapse is near, using those funds to get a tangable, secure home might not be a bad thing
afterall if things really go south the fiat dollars we have saved wont be worth the paper they are printed on anyway.
So what do we do? Use the money now and hope for the best? Or sit and risk the loss of the money anyway due to inflation etc?
thanks again guys!

It is a good time to build and you can choose quality contractors.

Start now.  The savings on financing alone will save you hundreds of dollars on your monthly payments

Build it rock solid brother.   If you finance and SHTF - I don't see anyone coming to take it away from you.   ICF is the ONLY way to go.   As soon as we get funds to start we are doing exactly the same thing.   You also may want to consider a 1000 gallon buried propane tank for your home and a high efficiency wood burning stove for heat source, especially in WA>  THere are some new ones out that are awesome.  That combined with the ICF construction and solar will set you up well....

I would pull the trigger now, as interest rates really have nowhere to go but up, and I also believe we're looking at some significant inflation rates coming down the pike in the next 3-5 years.  I would spend the money in areas it mattered, and it sounds like you've already identified them (ICF's, steel roof, etc.)

OTOH are there places you can cut costs, or not build out for a while?  For instance, if the plan calls for a finished basement with another bed/bath, leave that unfinished and just have the plumbing roughed-in.  Similarly in the kitchen, there's no need for things like engineered stone or granite countertops, high-end flooring, etc. immediately - you can live with laminate and vinyl and it'll save some cash.

This. The collapse (if it happens) will come no matter what. If it doesn't, you now have a house.

Do it now.  

Advantages I see.  

#1 you're going to beat inflation.   Go check out what inflation rate the fed is going for.  
#2 you're going to get your pick of the best contractors.
#3 Materials are at an all time low.  

This guy knows what he is talking about!  

I'd much prefer having money tied up in tangible goods rather than stockpiled cash right now, be it a house or even just the materials to build one.  Do you already have a blueprint and builder in mind?  There's a possibility you could work with him to tighten the specs on exactly what you need, and go ahead and start buying materials.

Do you already own the land you'll be building on?  Rural?  First investment might be a pole barn or metal building which you can use to store the materials... hell, put in a bathroom and well and you've got a makeshift BOL at the ready.  You won't regret having the outbuilding once the house is built.

I personally don't see the price of anything going down any time in the near future.

Hard Assets +1K  having the assets where they can be stolen before nailed  down -1trillion fail

We put an old mobile home on site for under 4K lived and built on site and then sold the trailer for 5K

In this economy theft is on the rise and you don't want to be a stat.

Pull the trigger.  Land values are amazing low if you don't already have land.  Construction costs are also very low, and IMHO opinion, both land costs and construction costs will be higher in 24 months than they are right now.
If you need financing, now is an amazing time rate wise.  

If you are worried about using all of your capital in building, but can build your house without financing, I have another idea which may seem counterproductive yet may partially alleviate your fears.
Build your house.  Pay out of pocket for it.  When it is completed, if you feel you need some of your capital back, refi it as an existing home and pull out the cash you feel you need.  Rates are very, very, very low right now on refis, but construction financing is very difficult to get, so getting the refi after completion will likely be easier and cheaper, both up front and in your rate.  It's just an option, maybe it's not the best one, maybe it is, it's all up to you.  

In my market, I am seeing the initial phases of a rebound.  2-4 unit multi family is strengthening, as is desireable ag and rural land.  Inventory is dropping.  Our weekly sales rate is about 1.1 times our weekly listing rate for the county.  Whether or not these are signs that we are starting to recover value or not isn't clear, but these are not signs of a continued decline in value.  Once home prices start to recover, costs will increase as well.  Building costs are down right now because it is cheaper to buy an existing home than to build one.  Once that relationship rights itself, building costs will correct.  Now really is the time to build if you are going to build.  

IFC is awesome! Only way to go IMHO.

Don't forget to allow for 20 to 40% over budget. That's the nature of the beast on building your own home.

That's a percentage that has be pretty much the norm for custom builds. Things get fluid during construction and if you don't have allowances for some overages you may miss a very lucrative opportunity to add something unforeseen for very little investment during the build that you could no way afford after it was complete.

Things like extending a room for cheap or adding special trusses to an area to allow for a second floor where one wasn't planned. Even a chance to upgrade wiring or plumbing cheaply when there are no walls in the way.

thanks guys!
we are paying for the project with cash..
we decided not to go until we could pay it all, no loans.
the land it is on is great, its 3+ acres.
+1 on the propane tank, already got that covered,
going with 2 1000 gal tanks
the wife thinks im nuts!
also, going to have a fireplace with a woodstove.
with the ICF and steel roof we should have quite the fortress!
will update with construction pics, probably starting in July.

Modular is the way to go. They construct in an enclosed factory, work regardless of weather. I even went with a modular basement by Superior walls. It came insulated to R12.5 with continous envelope, I just insulated 90% of the walls so far with R19 fiberglass although you could use foam. My upstairs are R22.
The only problems I had were with the local contractors. And yes build.....if there is SHTF.....the banks will collapse anyway.....come on take my house...My cousin was in banking...he told me...we are in the money business, not Real Estate, not selling cars.

as in you can write a check and pay off the home or saved for a down payment ?

Sounds like write the check and pay as they go.  No loan.

Oh I didnt see this...........leave 20,000 in the bank as an emergency fund and and go for it........even if you have to take out a 20,000 mortgage.......(and slam that as fast as you can....Thats what Id do

YOU sir, are smart.

Like you, I am debt free and proud of it...

I have a very stable job!   What has krept up on me is the downsizing of our company insurance... more out per paycheck, more out of pocket, more deductable- both med visits and at the pharmacy, and less coverage.... its been worse and worse every year.  Now my daughter is in trouble....  less than a month in and the bills that the insurance company is not covering are adding up quick....  like passing $3k.  We are in this for 8 months.... its gonna be a bumpy ride.

Give yourself some cushion, but go full bore for a house.  Its a tangible posetion.

Do it now before the SHTF

Excellent!  That's exactly what I have planned as well.  I would run a solar lighting circuit as well when you wire it just so its ready in case you need it...
My plans also involve two 1k gallon propane tanks and a genset that runs on lpg.   Sound proof room in basement with the solar batteries and vented to outside.  I plan on having a small range in my basement as well.  Widow's peak with glass top for a grow room in winter.  Just a few ideas for you to ponder.  


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If it's in a realistically safe location, then yes it's probably a good time.

I don't know about materials being cheap right now, they aren't in my neck of the woods. Plywood we paid $10. a sheet for 5 years ago is now $15. a sheet.

Everyone is cutting their timber- day late and a dollar short IMO. The loggers are saying the mills are giving them quotas to maximum number of loads a day. Even with that, see a lot of smaller and smaller trees on log trucks....

We built with block and poured solid, sorta similar to ICF. The nice thing about using a masonry product like these is that you can leave the masonry walls for a while before having to move forward.

I.e, you pour your slab or build a basement probably where your at, lay your block for your walls, pour them solid and you could walk away for a month, a year, couple years, etc. I.e, everything is masonry at this point- no wood to rot, etc.

Why might this be important? Because above all else you want to build your retreat DEBT FREE.

What good would it be to have 20 acres, bulletproof fire resistant house 3KW of solar, etc. only to lose it during an economic slowdown?

Whereas with stick framing, once you start moving off of the slab or basement- you have to keep moving till it's dried in. Just putting 2x6 walls up and then walking away for even a couple weeks is a bad idea.

Also, cement blocks you can STOCKPILE. We bought 900 in 2001 for the eventual use on an addition. We paid $.75 or so per block delivered. Years and years later we used the block on the addition when blocks were $1.50 each.  Had that money just been sitting in a savings account marked "addition" it would have PURCHASED LESS MATERIALS a few years ago versus in 2001. Make sense?

I would advise- and it sounds like this is your plan- to go forward paying CASH as you go. Take no mortgage. If you have to get your masonry walls down and let it sit for six months, so be it. The world is NOT going to end tomorrow.

The beauty of masonry like that or reinforced block is that- even with just the walls done- you have a TOUGH, fire resistant, bulletproof shell that even without a roof, would be a great place to pitch a tent inside if TSHTF.

SHTF aside, truly OWNING your own home, i.e, no mortgage, is one of the BEST PREPS you can make and gives you a freedom you would not believe. So many of us are concerned about TEOTWAWKI but few of us consider COLMOLLIIN.

Good luck!

Lowdown3

"I don't know about materials being cheap right now, they aren't in my neck of the woods. Plywood we paid $10. a sheet for 5 years ago is now $15. a sheet. "


Yep generally speaking, there was a time about 2007-9 that inventories were high and business wanted to dump them to raise cash. IIRC that was pointed out here many times.

Now, generally speaking, business has adjusted inventories, many of our buying opportunites have passed [or CHANGED, that's what we HOPED FOR, RIGHT?  ] and Sellers are making hay -IN THEIR OWN KIND OF SURVIVAL MODE-  many of them not falling for the line that things are going to get better, since they can look around and ask the question, "what is happening ANYWHERE that would likely cause economic things to get better?"

Without finding any reasons, the businesses generally tend to maximize their profits and selling stuff cheaply isn't one of the ways to do it.

OTOH, I'm seeing land and other real estate prices falling. One property I'm aware of and similar to others that were selling for $140k to $180k 2 or 3 years ago, that many here would love to have, recently sold for less than $100k.

The saving alone on land would pay a good chunk of the structure to put on it, even at inflated prices for the structure.

Folks who purchased land and other property in the 'good old days' -that were good up to only a few years ago, are now loosing income. Others are trying to divest their holdings for a variety of reasons [incl seeing that they don't have an upside in many cases] and realizing far less than they were planning to sell for.

Folks who were paying attention to posts here 5 years ago suggesting accumulating cash for coming opportunities and pissed it away instead, are behind the 8-ball.

Obviously the OP was doing his homework.

Even though times are harder now and popular beliefs are being shreaded ––in many cases without most folks realizing it, folks who stay alert and pay more attention and study what's going on around them instead of living in fantasylands of burying shipping containers, etc, there are still and likely will always be, opportunities for thinking folks to improve their lives.

Start now. I work for a large landscape company that specializes mainly in housing developments and Model homes. We are swamped with work right now. We have not been this busy in at least 4 years. I'm not saying it's going to stick, but people are obviously buying new homes right now, or they would be building more. If this sticks, material and labor prices will soon be raising, as they are very low right now.
 

I am currently in the process of sellng my home and hope to build an energy efficient home.  I have looked into the earth sheltered homes and got a quote from the builder.  It was $65 sq ft to rough it in and $100 turn key.  That is very comparable to stick built homes in my area.  The down side is the local financing companys want 25% down because this type of home construction is very new in my area.

Even if you have the cash on hand I would get a construction loan.  That way if something bad happens and the house does not get finished you will still have your cash and the bank can have the unfinished home.

Absolutely!!!

I have been in several large loans for business expansion, business purchases, remodels, and investment property and I've witnessed several times where a bank wanted to loan money to someone who "really didn't need it" on the other hand I've seen lots of people go broke because they couldn't borrow the money they needed to stay afloat.  It's always easier to borrow money when you don't need it than when you do.  I can't see any situation in my life for a long time that I won't finance a big purchase and then pay it down aggressively.

Grove

Other than the fact that construction loans are almost impossible to get at this point.  The only feasible options for construction financing are hard money loans rolling into conventional new construction refi loans after completion.  So, during the construction phase you are paying interest on a hard money loan, which isn't pretty.
He has already stated he has cash on hand to pay for construction.  Taking what amounts to a cash advance (at least in the lending world) out to pay for something he already has the money to pay for is a counterproductive.  
If he finishes construction and realizes that he doesn't have the cushion left that he wants, that would be the time to get financing, when you can easily break into sub 4% conventional financing.  traditional construction financing at this point hinges on you being able to produce a unicorn that has been struck by lightning while being eaten by an albino shark.  

Hope that helps.  

A bit more difficult but not impossible.  As long as you own the lot and your credit is good its not that hard.  If you default they get the house and the lot.  Since they only loaned on the house they get the lot for free and should have no trouble selling it for what they loaned out.  Or if your credit is good and you have money in the bank you should be able to take out a line of credit.  Either way don't risk your money when you can risk theirs.  I would not worry about the interest on either because you will not be borrowing long term at those rates.  Unlike a conventional mortgage you are only going to pay interest on the amount spent each month.  So if you get a loan for $100,000 they only make that amount available to you.  They pay out as you go and you only pay interest on the amount used each month.  I've done several over the years the most recent being last fall.

yuuuup

thanks for all the replies guys..
Going to stick with the plan, going to pay cash for the entire construction.
Look for construction updates in the OP.
Architect is working on plans as we speak!

I've been reading this thread with some interest since we are in, almost, the exact same position.

We've saved for 25 years, sold our house, are living in a temporary location, and are about three weeks away from having the pilings pounded.

My wife is all in my face every day to move faster.  We also decided to pay cash.

We selected a contractor that would get paid a "management fee" for the project and then we pay a hourly rate for his carpenters.  There is no cancellation fee so we can stop the project at any time, pay what we owe as of that day, and resume later if need be.  Also no issue of draws or milestones.

We buy all materials directly and pay all subs directly with no markup.

Since it is new construction we can do some things to improve security so I consider this a type of prepping away.  Retro fitting our old house would have been way more expensive.

Around here labor rates are very good but materials are very high.  Lots of excuses from transportation costs to earthquake and tornado rebuilding.

Congratulations on your decision and I look forward to hearing how it goes.

Get started. Waiting will serve you no benefit.

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No shit I just missed on a 2600 SQ basement home short sale by 1 day

price was 180

The money you saved is worth less with every passing day.

If you are going to stay where you are, there is no time like the present.

+1 to this.  Cash on hand is still great to have for economic emergencies.  I have often thought about this, and if you can get a low interest loan, then the interest you pay is often worth it in order to keep the cash for emergencies.

Then again, I hate debt, so would be a hard choice.

You ought to look into concrete logs.
Basically concrete construction with a nicer log cabin look to it.

My goal this next 2 years is to pay off the house and increase the land from 10 acres to 20 acres.

"Either way don't risk your money when you can risk theirs."

Zactly!