Offsetting costs - strategy to build

The challenge I've faced with builders who offer an all-in-one package (not build plus model) is that they don't give any flexibility to source or use your own materials. Their argument by these builders is that they get a volume discount and pass it on to the the customer. I haven't found that to be accurate or truthful, especially in this current cycle where prices are coming down on some items (Eg. hardwood, kitchen countertops, cabinets, light fixtures) but their prices are still high. They may be getting a lower volume price but they are just marking it up = no net savings. One of the strategies I'm taking is to postpone payment of some of those materials. If my goal is to self fund or HELOC fund this until we sell our primary residence, the longer I can postpone paying the materials the better. If I can park my gains of my primary residence into a GIC or similar market fund and earn income between the time I sold and got the funds to when the postpone payment expires then those gains (after tax) may pay for some of those finished materials, possibly appliances.

For example, if I purchased windows for $100,000. I go with a window supplier who offers a no payments plan for 12 months after delivery and assuming delivery of windows is timed so it's close to the time when window installation is required (eg. 3 months into a build) then, in essence you have $100,000 in hand for 12 months from then. Home is sold at month 10 and moved into new build at month 10. That gives you 5 months to grow that capital gain in a GIC, dividend paying bank stocks or whatever risk profile you want to take. Follow that same approach for hardwood, tiles, vanities, countertops, paint, light fixtures and you could postpone $250K+. Because fewer people are spending on home repairs or even fewer on custom builds the entire construction industry is depressed. The material suppliers are looking at ways to incentivize buyers like discounts and do not pay plans.

If you are thinking about how to maximize your cashflow and potentially grow your cashflow post primary home sale taking this type of strategy could help.

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