Buying vs. Hiring

[dave1949]

Welcome and good luck on your home project.

I have wrestled with buy or hire over the past 10 years, so I understand your agony.

I've hired several projects out and spent enough to buy a good-sized nice 3-4 year old backhoe over that time. I could have done a lot with a backhoe but it alone would not have been enough to tackle most of the jobs I hired out. I don't have an uncle with a dozer but even that would not have been enough for some projects to achieve the same results.

I have gotten enough use out of my tractor with backhoe attachment to more than pay for itself for doing lighter/smaller jobs.

When I consider the total picture, I don't have a dump truck, excavator, dozer or trailer to haul those things somewhere if necessary, the tools or knowledge to repair and maintain that equipment or a building to put any of it in.

Aside from the one-time foundation and septic work, everything I do is an optional hobby type of thing: ponds, trails, field clearing, etc. To be honest with myself, my hobby is not maintaining heavy equipment nor am I interested in that. Something to consider, whether you would enjoy those kinds of projects or not.

 

[USAFpj]

will the higher down payment reduce the interest rate on your mortgage?

Steve, as far as I know, it will not as I'll be using a VA loan on the mortgage. But I would love to not owe so much, know what I mean? Yeah, I'm fairly close to Clemson; I'm at the base of Table Rock.

No, I haven't received quotes or bids as of yet, as I'm afraid if it's cheaper than expected, I'll not get my hoe:laughing: Good call, though. I should get some boots on the ground to see the property first.

You guys bring up great points. I do have access to a dump truck with that dozer, but if we were honest with ourselves, my Uncle works long hours like a lot of you, and may not be able to work when I need him to work. Further, that machinery, I know, requires a maintenance budget as well.

I'd also look pretty dumb if the bank denied the lending due to a $20K debt or $20K less savings account. As a 1099 contractor, every dollar in the bank convinces the bank that I'm not a risk.

 

[GPintheMitten]

Maybe hire your uncle is the answer.

 

[tcreeley]

I'm cheap with how I do things. Hire out the foundation and septic -they will do the job right. Use your Uncle's dozer to clear the land before hand. Get the house built. The bank will be happy with the extra money in your account. After it is said and done, if you have any money left over then buy a tractor.

 

[Gary Fowler]

I agree with tcreeley at least regarding the septic. Those guys have to be licensed and pull the permits after submitting the design. I doubt you would save even $500 in cost digging the hole and lines yourself so it isn't worth the effort. Clearing the land yourself might be something that you would want to do as it isn't something that has to be done prior to building. The leveling of the house site might be done with you uncles dozer but would need to be compacted after the site is levelled using a vibratory roller. These can be rented easily enough and this might save you a couple thousand in contractor cost, maybe more depending on the soil conditions and size of the area to be remediated.
Buying a TLB after getting your house loan would be better if you are marginally credit worthy now but otherwise it shouldn't matter a lot if you are not already loaded down with credit payments. It isn't so much how much you owe as how your debt to income level is.

Personally I wont be without my TLB as it is just so handy to have around the house. I like my B26 for overall size and ability. I don't think I would want anything any smaller OR larger for that matter. The B26 is just right in size.

 

[Silvic]

By the way,
Thanks for the job you have been doing.
It was always nice to know that you guys were there when/if you were needed.

All good questions/answers and the point about septic systems in some states having to be installed by certified installers is one you would need to verify. Becoming much more common.
Penciling out the money flow is what you need to do as was pointed out above.

As an example, many years ago when we bought our property, that we would build our final home on, we did a perk test as part of the contingency clause on the purchase. Without going into the details it cost us a little under $2000 for what was a little less than 4 hours of actual work. It did not go well at all. We ended up needing to do a much larger area search to find the correct soils that would pass the perk requirements for our area. Looking at what it had cost and what we estimated would be required to do the job we decided that since we would need certain pieces of equipment in the long run that we should buy it at the time and do the work ourselves. Following that plan we spent significant time/hours and finally got what was an acceptable site for a septic system.

After it was all over we looked at how many hours were spent, and estimated based upon previous experience, what the professionals would have charged us for the same quality and quantity of work (we already had one guy do the initial part for $2K) and we realized that we had paid for just under 90% of the total cost of all the equipment. It had been a fantastic choice/decision. Not only did we get the job done but ended up with nearly new equipment at the end of it that was effectively paid for (minus 10%). Since then much more equipement has been added and it has paid for itself many times over.

Each case is different and your finances may require you to actually go the less efficient cost-wise route. However, taking a pencil to paper and doing the calculations with estimates from professionals and comparing to your costs will help out in the decision making.

 

[2458n]

I worked with a very talented track hoe operator and when he built his house he did the digging, but he always said let the carpenters pound nails. Do what you do and hire what needs to be done and you will come out ahead.

 

[chevy]

First off, I agree with others that the septic system needs to be installed by a professional. Maybe even the foundation, depending on the type it is.

I am not sure I am understanding this.
You stated that you would rather put money down on the mortgage instead of buying equipment & doing some of the work yourself.

Is someone going to do all of the work for free?

If you do not buy equipment & do the work yourself, the money you will not be spending on your own equipment, will instead be spent paying someone else to do the work & the use of their equipment. It will not be put toward the mortgage.

I will add that if you are not comfortable doing the work yourself, you would be better off hiring it done.

 

[USAFpj]

You stated that you would rather put money down on the mortgage instead of buying equipment & doing some of the work yourself.

Chevy, basically I'm just wondering/whining out loud:laughing:. I want a backhoe, and know that this piece of equipment can not only be used to minimize what a professional will charge me to clear the land, but that it's future use will prove to be invaluable as well.

However, if I pay cash for the hoe, that then leaves less money in savings for down payments on the mortgage. The cost of that professional's work will be rolled into the construction loan.

After listening to you guys, the next logical step is to at least see what local pro's will charge to clear the acreage, grade, and dig a walk out basement foundation. If the quote is $6K, then a $20K purchase isn't the wisest decision at this time. Am I confusing the issue?

 

[HillStreet]

Chevy, basically I'm just wondering/whining out loud:laughing:. I want a backhoe, and know that this piece of equipment can not only be used to minimize what a professional will charge me to clear the land, but that it's future use will prove to be invaluable as well.

However, if I pay cash for the hoe, that then leaves less money in savings for down payments on the mortgage. The cost of that professional's work will be rolled into the construction loan.

After listening to you guys, the next logical step is to at least see what local pro's will charge to clear the acreage, grade, and dig a walk out basement foundation. If the quote is $6K, then a $20K purchase isn't the wisest decision at this time. Am I confusing the issue?

USAFpj,

It's all about job complexity and your skills. I went to an equipment auction before building my house and bid several bids on an excavator to do my own site work. I was outbid, and that was a blessing in disguise. I would have been in way over my head because of the slope, boulders, driveway, and drainage. The excavating contractor that I hired was a real pro and had the right size equipment to deal with it (my intended machine would have been too small).

If my land was an old cornfield with topsoil on a flat grade I could have handled it without any problems. So, your project depends on your land, site, septic design, drainage, etc. it is real nice to have your own equipment but sometimes you just need to hire it out.

By the way, I bought my Kubota after construction to do the landscaping. One contractor quoted me "$40,000 to put a lawn in depending on what I run into". So my $17,000 Kubota did all the landscaping work and I still own it. Buy or hire accordingly and best of luck.