An Insider on How to Pay for a Steel Building
Cost is always an issue when it comes to how to pay for a steel building, right? First, let me say, the sooner you can lock in your steel price, the better off you’ll be. As we’ve mentioned in previous posts, the price of steel rises. When you lock in this price with a small engineering payment, you gain a definite advantage. I’ll explain more about this in a minute. I’m frequently asked, “what are my options,” when it comes to financing the purchase and while I’m certainly not giving you any sort of financial advice, I’ll talk about what some people have done.
Personal Savings – Steel buildings are extremely affordable. They also go up quick and you can do much of the erection on your own. This saves you big on labor and leads many people to choose this option. It’s more popular than in a traditional building project involving brick and mortar. Using your personal savings has many advantages – namely, you don’t incur debt. The problem, however, is that if you don’t have the money right way and you need to save, it could take longer for your dream to become a reality.
But the beauty is that when your steel building is standing, you own it free and clear and you know that it was your hard work that made it happen. Be mindful, construction delays – due to weather for instance – might put you over budget. So it’s safe to give yourself some cushion.
Financing or credit – Of course, there are some pros and cons to financing and credit when it comes to how to pay for a steel building. The benefit, of course, is that it conserves working capital. This means you’re able to keep more cash in your pocket. The disadvantage is that you pay for your steel building over a longer period of time. You’ll also be paying interest, which means that over the long run, your building will cost you more.
There are several types of credit or financing you can consider such as bank financing, credit unions (common in rural areas), a construction loan, refinance, HELOC (Home equity line of credit), and even a cash advance on a credit card (which I would never advise because of extremely high interest rates).
The process of a steel building purchase begins by locking in your steel price with a small, upfront payment. When working with an Original Equipment Manufacturer, this initial payment is NOT a refundable deposit. It’s a small payment that goes towards drafting your drawings and blueprints. In fact, as soon as you place this payment, work begins on your drawings here, in house, at Armstrong Steel.
Remember, this nonrefundable engineering and drawings deposit goes towards the total purchase price of your building and locks in your steel price as well.
Once you have your drawings, you can go to the bank or credit union and get a loan. Many customers want the loan before they have drawings from us or they want the drawings for free before they go to the bank so they can secure a loan. This isn’t the way it works. Drawings and blueprints take significant time and therefore must be paid for in advance.
But here’s a solution that many people don’t think of. Say your engineering and drawings deposit is $4000, which isn’t an unreal number for a workshop or garage (sometimes the drawings are lower, sometimes they’re higher, but this is a safe round number). You pay that amount with cash, savings, or even borrow it from a buddy. If you decide to get a loan you can then cover the $4000 you paid, “recouping” your money with the total loan.
I want to end with this. You might be surprised to read this, especially on a steel building site, but I am an insider, remember. If you can’t afford it, don’t buy it quite yet. Your steel building should be something you enjoy, not a huge financial burden.
Alternatively, if you can cover the engineering and drawings deposit, let’s get started! What are you waiting for?
Photo courtesy: Pictures of Money