Guys, I’m saving cash to build a house possibly next year if everything goes smoothly with planning.
I’m not sure what to do with the cash I’m saving. Lumber and building material prices are climbing faster than I thought possible, meanwhile my money is liquidated and only making me 0.5%. At this rate I won’t be able to afford the house I designed last year because I just can’t keep up with the INSANE price increases.
What would you guys do? How about getting some extra income on the weekends without getting a second job? Ideas?
Look around for old barns and garages to pull down, then salvage building materials like beams and joists. You might even be able to charge people to remove their old buildings.
You might need some of that cash to rent equipment.
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Are you dead set on building? You could look at a fixer upper. Housing right now is insane. Materials are also insane. I think the fixed upper is a way to get around that a little bit, plus you get to do some design.
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A good question, there are a lot of options, but none sound as appealing to me a building the exact design I want. The land I have is a waterfront that I already own, which was hard enough to find, I would hate to sell it.
I think my priority would be to cut out any expensive finishes or leaving a bathroom unfinished before having to switch from building. Man, I wish I was locked into a building contract a year ago!
Times are crazy right now, everyone is making money off of crypto, stocks, and real estate, but I’m stuck with a low risk profile. I feel like I’ve been missing out on the best investments of my life just because of poor timing. This building project has been in the works for 3 years, so I’m pretty attached to it.
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Yeah, I wouldn’t give that up either. Does the home have a basement planned? You can skip on finishing that if so.
I think go lower end finishes. Many times those really don’t make much difference. I have low end granite (it is much thinner, and uses granite end caps to make it look thicker), and it is much less money than the high end stuff. I don’t think most notice.
The thing you can’t change is location.
Given you plan to buy a home next year, your investment horizon is approximately 12 months. A timeframe so short would mean a cash/near cash portfolio is optimal.
At a push, you could look at a Timber ETF or an ETF that has a high correlation to building materials prices for where you are - which depending where you live, may be possible. That being said, extremely unlikely you will find something that perfectly correlates with your local prices and you will be taken on some form of market risk which, with your investment horizon, is risky.
I would just be looking at savings account that offer an introductory special rates for a certain amount of time e.g. 2% for 4 months. Once the introductory rates finishes, move to another financial institution offering a ‘special’ rate. Given your liquidity requirement and timeframe, you do not want to be placing your capital in high risk investments (crypto, stocks) - despite the potential gain that may arise over the next 12 months.
Good idea. I’ll see what I can find.
Wait out labor and material prices. All time highs right now that are unsustainable.
Invest it all in a well balanced portfolio and in <5years construction costs will have dropped dramatically and your nest egg will have grown considerably.
Don’t build now off emotion.
The other option is to subdivide your land if zoning allows and sell a portion of it off after building your house and stubbing utilities to the new lot.
I’ve thought about this in depth. It might be a good option. I do have a couple permits that will expire in a couple years that would need extensions if things stay high that long. I think he big question is will things actually come down?! I know Warren Buffet expects this whole pandemic to be inflation rather than a temporary blip, and that is worrying for a lot of reasons.
Zoning wouldn’t allow this unfortunately. My lot is already grandfathered in as a subdivision that would not be permitted in currently.
If things don’t come back down, your nest egg has still increased considerably. Labor and raw construction materials are not this high because of inflation… OSB has tripled in 2 years, skilled trades and GCs are booked out a year or more at all time high wages. Expect prices higher than 2018, but the current prices are a combo of tarrifs and covid, not inflation. IMO.
I’d wait it out, and in the meantime grade/pad out the lot, install landscaping away from the pad and lay down areas, install a composting toilet and put up a sweet $10k yurt to glamp in or rent out on AirBnB. YMMV.
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Congrats on the waterfront property, that’s awesome!
Saying you feel like your missing out on investments of a lifetime sounds corny and 99.99% of the time it’s a purely emotion driven sentiment. However, this time it’s true! Humanity is in the early stages of a revolution to rival the Industrial Revolution. The trick is knowing where to put your money because many (probably most) of the options in Crypto, EV, AI, Clean Energy, etc are going to go bankrupt.
If you have to build next year, just follow the plan posted above of getting 2% savings rates and then building what you can afford leaving what you need to, unfinished. That’s a solid plan.
If you can wait 3 years, invest in Tesla. Tesla is the one safe investment, safer than the S&P 500, and it’s going to double in the next 3 years. Now’s the time to buy because share holders are just now coming into Long Term Capital Gains and they are taking profits to buy property, cars, or go on vacations. The big players want to lock in their gains before the Biden administration raises the tax on long term capital gains.
So, the share price isn’t going to do shit through the rest of the summer, maybe through the rest of the year, but then it’s off to the races again next year. Of course that’s assuming some massive market correction doesn’t take place. Even if that does happen, TSLA is still the safest place for your money and the surest bet to outpace inflation.
This is where people normally say, “do your own due diligence”. In this case, just buy Tesla, it’s such a no-brainer.
I didn’t find any promotional rates, but I did find some “open an account any get $700 after a $50,000” deposit. I think I’m going to play with that a bit.
See, that’s the thing lol… Elon Musk is the embodiment of literally everything I hate about this planet. There is just no way I’m investing anything to help that guy.
I hope you will engage me in a serious conversation about this because I’ve heard that sentiment repeatedly and I have no idea why people think this.
From my point of view, Elon Musk is literally the MVP of the the planet. The mission for Tesla is to “accelerate the world’s transition to clean energy”. This is an altruistic mission. Elon may have become extremely wealthy (on paper) pursuing it but money is not what drives him. It’s the mission that drives him (to work 18 hour days, to sleep on the floor at the factory).
The purpose of SpaceX is to colonize Mars. Elon wants to colonize Mars because he wants Humanity to survive if there’s a catastrophic event such as a meteor strike. Again, this is a purely altruistic endeavor.
Elon made a few million selling his first business to Compaq then he made hundreds of millions selling Pay Pal. He could have retired to Maui at that point and lived a life of luxury (that’s what I would have done) but instead he risked it all on two, almost certain to fail businesses, for the purpose of helping humanity.
That’s the way I see it. Like I said, the MVP of mankind. Please tell me what you see.
I can leave or take Elon Musk as a person, but I will always support a billionaire dilettante who smokes blunts.
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This is the problem. He is idolized like a god. There are tons of people doing better work than him, working around the clock, and not seeking recognition or making stupid publicity statements like shooting cars into space, essentially marking his territory for his own ego.
So humans can just destroy another planet? How about we learn to live on the planet we have, and not treat it like a disposable trash can.
Is he really? Tell me exactly how he is helping humanity and not just bolstering his ego? So people can drive overpriced cars with pretentious customized plates, while he drains the lithium mines in Argentina leaving the locals sick and poor. Or so he can throw more trash orbiting the earth so rich people can take selfies in space? It’s all an illusion he is creating. He wants to be the richest man in the world, he wants the spotlight, he wants to be idolized, and that’s why he works tirelessly.
20 minutes away from Elon hosting SNL on NBC can’t wait. 2nd or 3rd richest man in the world some one who the left has no control over. HaHa no wonder half the cast is worried about Elon. Tick him off he buys the entire NBC network and hands them all their walking papers. I have not watched MS TV in over 5 years but will be watching tonight.
As for the OPs question as long as the Federal Reserve is buying everything in site the American Stock market will go up no matter what. When they quit the market will crash like you have never seen it before.
I see a lot of speculation with Tesla. I don’t think Tesla is worth the market cap currently. It may be a bubble, it may not be a bubble, but my feeling is Tesla is a bit of a gamble. Lots of people can make money, but imo it will be at the cost of others losing a lot of money, not company performance. I could be wrong though.
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Your understanding is the exact opposite of reality. He is helping save the planet, not destroying it, or Mars. He’s the most significant driving force in getting us off of fossil fuels. Sure, no doubt there are some people working just as hard as him for noble goals. Don’t blame him for doing a better job at it than anyone else.
Ditto for people idolizing him. That’s not his fault, that’s not his goal. His goal is to drive the mission.
Tesla starting with luxury vehicles was the game plan. Models S & X fund Models 3 & Y. Models 3 & Y fund the next generation which will be affordable for everyone. It was a strategic choice to execute the mission.
Lithium mines in Argentina? LOL That’s creating jobs, not leaving people poor. Lithium mining is a lot cleaner than oil drilling and all materials going into lithium batteries are recyclable. There will be a time when there is very little mining, it will all be recycling.
SpaceX, to my knowledge, has no “tourism” plans. That’s Virgin Galactic. The mission of SpaceX is to have a sustainable colony on Mars so humanity will survive if a meteor strikes. Not incase we pollute life off of the planet. SpaceX is also launching a network of low orbit satellites to provide everyone in the world with access to the internet. Another good thing.
Are you really mad at Elon Musk over orbiting debris? My guess is SpaceX has contributed less to this than anyone else launching metal into space. Try China and NASA.
Tesla is growing revenue at yearly rate of 50 to 100%. Even if the stock price is in a bubble, the growth of the company is going to catch up to the bubble. Before the last quarter result, the PE ratio was 1000. After reporting earnings, the PE dropped to 700. If that happens every quarter, how long will it take for the share price to be cheap again?