Which way is the correct one to say this and is there a difference in meaning?
- I built it out of the stuff I found in the garage.
- I built it off the stuff I found in the garage.
- I built it from the stuff I found in the garage.
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1 and 3 are perfectly correct and convey the same meaning and tone.
2 sounds funny, but gets your point across just fine in context. You don't build something new "off" of something else, unless you want to say something like "I built a bedroom off of the side of my house", meaning strongly enough, that you built it on the side of your house
The difference is that "to build out of X" means that you used X as the material to build the new thing, whereas "to build off of X" means that X is in some way connected, physically or metaphorically, to the new thing you're building.
That's just how I see it though, the meanings are so close that there is probably usage supporting either case.
As an aside, it would also be equally correct to say any of the following
I built it out of stuff I found in the garage (omitting "the")
I built it out of some stuff I found in the garage
I built it using (the) stuff I found in the garage (again, "the" is optional)
I built it with (the) stuff I found in the garage.
It was correctly pointed out that "using" and "with" could indicate that "the stuff" refers to the tools you used to build it, rather than the material you built it out of. In these cases it's somewhat ambiguous, but in the context of the example sentence I think most people would still think you're referring to the material rather than the tools.
To tease out the difference, here's an example of it referring to tools:
How did you make the hole in the wall?
With/using stuff I found in the garage.
The listener would infer that you used some tool or object from your garage to make the hole
And an example unambiguously referring to materials:
What did you make it out of?
I made it with wood/I used wood
Another example of the overlapping/ambiguous meaning of "using"
What did you use to build the house?
Could be answered by:
I used wood and nails (materials)
I used hammers and saws (tools)
Either answer might be correct, depending on what the questioner intended to ask.