My current build has been done on the cheap.
1990 Trek 800 Antelope- Bought 3 years ago on craigslist for $50 (I think.)
2 new tires, came with a pair of bikes I bought for $65, sold one for $65, tires=$0
Sprocket 44t, came as an extra with nuts and bolts that a vendor sent me as a replacement for the nuts and bolts that were missing from the kit $0
New rag joint $12
New throttle and grip $15
New chain $10
Engine kit itself $130 3 years ago, pulled off my chopper
New clutch lever $12
New spark cord and boot $0 salvaged off another engine that doesn't run
paracord to cover wires and zipties $3
Rear Rack for gas tank free off scrap bike I bought for $15 for parts, sold antique components on craigslist for $20 so $0
Round plastic gas tank from lawn mower $15 ebay. Came with petcock and junk in tank.
2 military style bags from daily steal for $16
cup holder $6
lights $15
headlight $10
Tensioner $10
Assorted hardware $20
Spray paint $1
Alarm $10
If I count ONLY the stuff I bought new not the stuff I scrounged around in my garage for I have spent $156 The scrounged stuff amounts to about $195 for a total of $351.
Of course for that amount I could have bought a pre-built bike from one of the guys on craigslist but it wouldn't be on a Trek.
The best bet to do this on a budget is to look for a quality frame on craigslist at the end of the biking season, around October. Or when colleges let out in May. the market is flooded with nice bikes at low prices as people seek to rid themselves of stuff they don't want to store or pack. you can fund your build by starting out by buying a really NICE frame and bike and cleaning it up, tuning it, putting new tubes and or tires on it and making it shift nice. Then put it back up on craigslist covering your costs plus enough to make some nice money. I did this to buy my first chopper. I started out with a kids Haro for $25. New tubes and a tune up I sold it to a guy less than a week later for $75. I bought another $25 bike and did the same.
The key to this is buying bikes that are withing your tool and skill set. Don't buy a bike that needs a new bottom bracket if you can't do that job. Also, don't price the bikes unreasonable. There's a guy near me who does this and has his prices so unreasonable no one buys them so all he does is clog up craigslist. The other key is to never sell below the price of your materials. It's like flipping a house, you are adding value for the people who can't fix their bikes and will end up tossing their bike away in a few months. Other times you give a college kid a steal of a lifetime.
I had a lot of fun doing this and I made enough money to buy my first chopper and all the parts I needed to mount the engine. All in all I was only out my time.