What items would you pay cash for?

wishiwasinozSeptember 2, 2012

I am trying to get a grasp on what items should be rolled into the loan & what items I should pay cash for. We will have roughly $800k into the build (plus the lot $200k).

The minimum we have to put down is 10%.

I have roughly $250k to play with for the down payment & cash items. Say we put down $150k for the down payment, what should I buy with the $100k? For some background info. DH works for a co. where we get really big discounts on many items that HD or Lowe's would carry.

My thoughts were appliances (around $17k with DH's employee discount), lighting, as I can find some great deals on that (roughly $4k). What about plumbing items (toilets, sinks, faucets, etc.)? Any big chunks like cabinetry?

Also, does anyone have a stellar spread sheet to keep track of all these things? I am totally Excel-challenged. :-/

Thanks for any feedback!

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I woudn't pay cash for anything. I would put it on AMEX and get the points. If you have a card that gives you points then I would try to use that as much as possible. Spending that much on the card would buy you a a couples vacations from the points.

If you are buying custom cabinetry, which I assume at your rice pint, most local places don't accept credit card without charging you 3%. That will eat into your points. Some of the bigger brand ones may not charge that.

Also try to buy as many thing online as possible to avoid tax. Shipping is usually free. If you are buying local then see if they can price match (including tax and shipping).

That said you can buy any items yourself. However some items the hvac, electric, and plumbing contractors will want you to buy from them.

    Bookmark   September 2, 2012 at 12:55PM
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Also wanted to say where are you able to get a jumbo construction loan with 10% down? I thought the minimum was 20%. some have to go higher for appraisal.

    Bookmark   September 2, 2012 at 12:56PM
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I use Discover for points. Thanks for the reminder. I am a big online shopper, for sure. Many items we can get through DH's co. I will just compare pricing for those things.

Our builder is fine with us getting as many items we want from DH's co.

As for the loan, due to DH's profession, we are able to get a jumbo construction to perm loan for as little as 10% down for $1 mil or less.

Lucky ducks, I know! It's through BBVA Compass.

    Bookmark   September 2, 2012 at 1:31PM
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It depends on how good you are with the details.

Like, if you know what shower valve and shower drain to order with the shower trim you chose, and you don't think you'll mess that up and/or change your mind and have to return items to online places which is a pain in the neck, then go for it. Otherwise, you should have a plumbing store help you.

Don't underestimate the amount of work this will require, though. I didn't buy all that much myself compared to what you are considering. I bought all lighting and some plumbing (kitchen faucets, kitchen sinks, towel bars), and a few vanity mirrors online due to selection and pricing. It's taken me *weeks* to move all the stuff over there, plus hours and hours of time online picking stuff out, etc.

Worth it, but just sayin'...

    Bookmark   September 2, 2012 at 2:56PM
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I read someplace about how items purchased and installed by your builder will be covered by their warranty and items you purchase and have them install may not be. I think the example I read was about plumbing. If a faucet you bought and they install leaks and ruins your hardwood, they might not have to fix the mess. However, if their faucet leaks and ruins your hardwood, they would be responsible for fixing/replacing the faucet and your floors. I'm sure someone else around here is way more knowledgeable about this than I am, but I did worry about buying big ticket items on my own.

Of course, I did end up buying my farmhouse sink and a few faucets online- I saved a couple hundred dollars that way. Even my builder was impressed with the price I got on a moen faucet on amazon. It definitely wasn't worth it to buy all te plumbing fixtures though. Yes, it might have cost a bit more per item, but at least the builder can deal with all the issues if something needs another drain or connector or if something is broken. Same with light fixtures- we bought a few important ones but left the rest to the lighting store. Not worth the time and effort to save a few bucks.

One more thing- appliances. I told the builder I was shopping online and thought we might just want a 7k credit. When he sent us a price list for the appliances we selected, the prices were so close to what I could find online that it wasn't worth the effort. I kind of wonder if we got better pricing because I was shopping online and they knew we expected better prices? Maybe?

I guess it depends on the relationship you have with your builder. I have many old posts about my annoyance with tile selections. I wish we could have just bought our own and hired our own people to install it, but that's not the type of custom build we're doing. I sucked it up, picked cheap but live able stuff, and we plan to replace it all in a couple years.

    Bookmark   September 2, 2012 at 5:30PM
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To echo what Mom3E says - I was pretty sure when we started this that I would buy all my appliances online. I had picked them all out even before we decided to build, that's how obsessed I was.

When I went shopping for appliances, the prices at local stores were even less than a site like AJMadison. And if I bought from the local store, I was supporting local business, my builder was happy, and I didn't have to deal with shipping/storage.

But most important of all, the cabinet guy called the appliance guy and got the specs to build the cabinets around the appliances. So if there is a mistake and something doesn't fit, it's on them. Whereas if I had bought myself and I messed up, I'd be out $$ to fix it. And it's more than just measurements, it's things like the position of the plugs and the connectors, the size of the duct for the range hood, etc.

    Bookmark   September 3, 2012 at 9:36AM
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Make sure you understand that anything you put on the loan become collateral for the loan.

It can sometimes creates issues down the road with refinancing and such.

    Bookmark   September 4, 2012 at 10:34AM
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I have a slightly different perspective. One of our biggest concerns is the appraisal process. While I know that I could sell our home for a profit once it has built, one nearby short sale could drastically reduce the value from an appraisal perspective, so we are trying to keep the loan value down as much as possible.

As such we will be paying for upgraded finishes in cash and including base builders grade items in the contract and specs up front.

We plan to pay for tile, our steam shower, appliances, hardwood floors and possibly an upgrade to the cabinet budget in cash.

    Bookmark   September 4, 2012 at 10:43AM
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The thing is, contractors get building supplies from DH's co. More than likely, the subs (plumbers, electricians, etc.) get the majority of their products through DH's company, therefore financially, it makes no sense to buy through the subs & pay their mark-up when we can get is slightly above cost. It is one of the great perks for DH's job. Our contractor is okay with us getting products this way & has stated it won't affect the warranty of the product or installation. Of course, this will all be in writing in our final contract with him. When choosing a contractor, we were very upfront with this proposal. He said the only downside will be that the burden will fall to us (me specifically), if something goes wrong with the product & something needs to be returned, as well as being at the job site to sign off for items. Again, that is all no worries.

Does this all make sense from my perspective? I know that I can save receipts to submit towards the loan, but I honestly don't want to get that detailed. I just want to buy what I can that makes the most sense.

    Bookmark   September 4, 2012 at 2:04PM
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I think it makes perfect sense.

Though, it is hard to say what items you should buy this way as it is difficult to know what items you can get for a discount.

Personally, I would order anything that you can manage on your own and at a discount. Though, I'd keep some receipts just in case you end up needing to submit them for any reason! :)

    Bookmark   September 4, 2012 at 2:55PM
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Don't underestimate how long the process takes to order your own things. I'm retired so I do have the time; however, I feel like sometimes I'm working full time again with all the research at stores and online for the best prices and quality.

Our bids came in higher than we wanted to wrap up in a loan. We had originally hoped we would be taking out a small loan to cover what $$ our present home sells for. Haha, that's not happening! :-) I guess we want what we want for our last home we will own.

So, we decided to purchase what practical things we could purchase which right now is all our appliances (locally at a great price - watched and waited for the big sale); all our faucets for kitchen and bathrooms; towel racks and hooks; ceiling fans; all our lighting fixtures (build.com matches online prices and I've done it on all the fixtures + free shipping and no taxes); and all our interior door handles. I've have everything inventoried and have taken pictures of all of it as it comes in. The problem is you have to have a place to store it all. In addition, my husband is building all our cabinetry.

We are still coming in at $127/sq ft to build not counting the above. That is what our daughter and her in-laws paid two years ago in the same area of SW Indiana for their custom built homes.

My husband is still working but will retire in the spring, so we were trying to purchase as much as we could while the money was still coming in.

We decided there were some things that we would let the contractors purchase because when comparing prices it wasn't worth the hassle if we purchased the wrong things.

Good luck. I hope you can make it all work for you. We've learn a lot about the whole process so far and have lots more to learn.

    Bookmark   September 4, 2012 at 6:10PM
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The problem is you have to have a place to store it all.

Very true! Plus, you have to figure out where you will have it delivered and when. If you are having it delivered to the job site, who will take delivery? Will there be someone there when it is delivered? And who is responsible for putting it somewhere where it will not be in the way. If you are not having it delivered to the job site, then you have to store it until it is needed on the job site and get it there yourself.

    Bookmark   September 4, 2012 at 6:35PM
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Those are all good points. Thank you!

The contractor will be making arrangements to have a steel deadbolted door on our master bedroom once the house is closed up. In our current home, I have one bedroom fully dedicated to items, such as lighting, etc. (mostly smaller items). If needed, we have the garage & can park our cars outside & take advantage of the storage, as we live in a temperate climate with no snow.

For the smaller items, I will have them delivered to our current home. I am assuming I will be at the job site every day, so I will just bring loads over here & there once our master bedroom is secure.

I have a basic spreadsheet started with precise descriptions & location of the item for the house. I also write on the outside each box what the item is & where it is going in the house. I have a pretty good photographic memory, so I will put this to use, too.

I am a SAHM, so when the kids are in school, I am the house project manager. It is my full-time job at the moment & one that I am rather enjoying. Now ask me in 7 months if I am enjoying this job -- I may have another answer! :-)

    Bookmark   September 4, 2012 at 7:06PM
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Sounds like you have it under control. Don't forget though that things will need to be moved out of the master bedroom and put somewhere else when things are being done in there - like when they are installing the hardwood floors, the drywall, trim, painting, etc. And if you are buying the hardwood floors, all that flooring takes up a lot of space and is heavy to move around (speaking from experience).

    Bookmark   September 4, 2012 at 7:58PM
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