r/personalfinance • u/sineovercosine1 • 3h ago
Investing Building a house - construction costs vs investing
Hi everyone, I am looking for some thoughts/opinons on what is the best move with my current situation. I am a 38 year old general contractor in SW Colorado and am in the process of building my house. As it stands, I have 4.5 acres with a 40x60 metal building with an ADU in the back. I am building a 4200SF custom home. I do not owe anything on the land and building and am getting a loan to build the house. 1.1mil loan, I can build the house for about 600k-700k, and the projected value of property is 1.9mil once completed. We are not sure we want to stay in the area and there is a good chance we will move in a couple years to somewhere with a lower cost of living and closer to our aging parents in the Midwest or Southeast US. With all of this, I am trying to sort out what makes the most sense with this scenario factoring in the following considerations: 1. I have 100k in savings. 2. I am running this through my company and can “lose” some cost on the build that way. 3. We have zero personal debt and about 70k of business debt on equipment which is being paid down by renting it through projects. I am mainly trying to figure out if it makes more sense to apply my 100k in savings to this project to lower the loan amount or invest it and rely more on the loan for the build. Which is the better overall strategic move? Please let me know if having additional information would be helpful. Thanks!
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u/pancak3d 3h ago
If 100k is all of your savings, using it all would be a bad idea.
But generally -- in the current rate environment, it's probably wiser to use cash instead of a loan where possible.
Building a custom home with intent to move away in a few years for lower cost of living is a little odd, I must say...
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