SMART MOVES

WHAT YOU SHOULD CONSIDER BEFORE MAKING YOUR LARGEST PERSONAL TAX INVESTMENT

Despite a fluctuating economy and major tax reforms, investment counselors are standing behind what continues to be the best, and consistently unquestioned, tax shelter – your home mortgage interest! Because of this, demand for high-end housing is increasing, as the move-up trend continues. And for those of you planning to spend more than $300,000 on your next home, we seriously recommend you consider having one built to your specifications.

Granted, you could find a home with everything you’ve ever wanted, at a steal, just waiting for you. But that’s the exception, and we encourage caution. The building industry in Dallas has stabilized after a very upsetting 1986. Homes that are “steals” now, generally indicate there is something lacking in the house – not the economy. Especially in a high-end home. In other words. SPEND YOUR DOLLARS WISELY!

Consider the business, financial angle. By selecting your own lot and designing your own plans, you are in control from the start as to how and where your money is spent. The price of the lot and the home should be finalized before construction ever begins, so you will know exactly what your new home will cost you. And by building at a fixed price, when your new home is ready to move into, you’ve already received nine months appreciation! Your investment value is immediately increased.

Aside from not having to pay for features you really don’t want or need, you also are not paying the builder’s carrying costs that are a necessary part of pricing a spec home. And should you presently have a home to sell, you are given 9-10 months to ask and receive a fair price, rather than perhaps making double mortgage payments (which are no longer tax deductible) or selling it at any price, just to get rid of it. (A change in the Tax Reform that will seriously affect homeowners pertains to multiple home mortgages – only the interest on your primary and one vacation home are deductible).

Isn’t your PERSONAL time worth something? Rather than spending endless hours looking at homes that don’t suit you. you are better off spending a few hours in constructive meetings with your builder and architect.

So let’s say you are convinced to look for a lot and build. What now?

In looking for a lot, search for the best long-term investment: those protected against overbuilding, which stimulates negative appreciation. There are many tried and true land pockets. Areas that are near heavy business zones, but not actually in the traffic patterns, will always be safe. Look for areas with low property taxes, or limited land availability. And of course, atmosphere (trees, water, terrain) always enhances value – present and future.

Obviously, a reputable homebuilder is a major concern. The selection of builders today is probably the best its ever been. The last two years have weeded out the undesirables – and yes, we lost some good ones too – but the builders today are here because they have continued to offer what their particular clientele have wanted: quality, fair prices, and stability, in good locations. Most builders today won’t be going out of business a month after they finish your home.

Many people like to consider a builder who is also an architect. By selecting an architect/ builder, you have immediately eliminated the possibility of communication breakdown or misinterpretation of your plans. As architects, we mentally design a home around what you. the client, are telling us. As builders. we make sure that the home is built exactly to your specifications.

No matter whom you select, make sure your needs are being met efficiently and fairly. Ask questions and get answers. Make sure you are being understood. You already have a mental list of specific features you want. Itemize them on paper and take it with you.

In summary, if you are considering a home move in the future, one of the smartest investments you could make in 1987 is to preselect a lot, or build if you are ready. The three key words in Real Estate – “location, location, location” – did not just happen. Land values fluctuate, and your best investment is in areas that will remain relatively stable and offer good appreciation.

For example, there is a luxury estate property in Addison called Bellbrook Estates which boasts several of Dallas’ finest builders. With the limited residential land available in Addison, and considering the city’s growth orientation, appreciation and demand should exist. A major draw here is Addison’s low tax base, which is the lowest in the county, and will affect your overall tax picture.

Another good area is tucked away on Marsh Lane at Valley View in Farmers Branch. This family neighborhood offers quick accessibility to Las Colinas. LBJ, and the Dallas Parkway, without being in the congestion, like other nearby areas arc. At Valley View Park Estates, you have a good selection of treed lots, some of them on the creek or lake. And here you can buy just one lot and select your own builder.

For you “South of LBJ” fans who are tired of yard work, but want a large luxurious home, there is an area behind the Aerobic Center on Willow Lane off Preston Rd that offers zero-lot line living at its finest.

There are many excellent builders in Dallas owning excellent lots. But by having pre-purchased your future homesite from a developer, you are free to call your preferred builder, rather than having to use the builder who happens to own the lot you have your heart set on. Remember, anytime you plan to spend from $300,000 to over $1 million on a home, YOU SHOULD BE BUILDING EXACTLY WHAT YOU WANT. And you can.

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