Building a custom home can be extremely satisfying, but only if you go into the process knowing what to expect and what to avoid. We recently caught up with construction executive Jonathan Hillert to get a few tips for people thinking about putting up a custom home:
1. Make sure you have enough cash. Some property owners think that if they own a fully paid off property, it will help them get a loan. That is often untrue. Banks maintain liquidity and reserve requirements for construction loans, and equity does not count toward either.
2. Build in the right neighborhood. If you build an expensive home in a modest neighborhood, you may have trouble getting the price you want for it when it comes time to sell. Conversely, if you plan to build an inexpensive home in a wealthy neighborhood, you may end up overpaying for the property.
As President of L&T Development, LLC, in Houston, Jonathan Hillert leads the organization in the design and construction of custom single-family homes. With more than two decades of experience in the real estate industry as an architect, developer, and builder, Jonathan Hillert has completed many multimillion-dollar projects through their full lifecycles. He regularly monitors industry developments and economic indicators such as housing starts.
On an annualized basis, new home construction declined in May 2012, a drop that one source attributes to a decrease in the number of apartments being built. However, builders requested a greater number of permits for new home construction as compared with prior months. The number of permits requested, adjusted to an annual rate, rose to the highest level since September 2008. Permits specifically for single-family homes increased to the greatest number since March 2010.
Overall, the rate for permits requested and new home sites remains roughly half of what economists would like to see for a “healthy” recovery. Still, the increases indicate a gradual improvement in housing starts.