Upscale properties aren’t defined by their price tag alone. As a luxury real estate investor, it’s important to note that VIP clients expect exclusivity. Wealthy individuals are willing to pay a premium for superior properties that exceed their expectations. For one, they prefer to live in a location that fits their luxury lifestyle (such as proximity to fine dining, arts, theatre, etc.). They also desire million-dollar views of the mountains, rivers, and more.
High-net-worth buyers are similar to “standard” homebuyers in the way that they also want the usual amenities, but they desire them on a bigger scale. They want everything to be elevated, from the type of materials used in construction to the architecture itself.
Is there a market for luxury real estate?
Yes, however, the market for this type of property is extremely limited. Upscale properties simply aren’t for everybody because they come with a premium price that’s often reserved for VIPs.
With that said, if you plan to purchase luxury real estate as an investment, be sure to study the market to make sure you can actually sell or rent it out in the future. Keep in mind that luxury properties attract a very specific type of person – if that person doesn’t live in your market, you may want to think twice about buying luxury real estate. A property management company in South Florida can help you pinpoint which markets are ideal for upscale investments.
What are the benefits of real estate investing?
Before investing in luxury real estate, bear in mind that this type of property is more expensive to operate. There’s simply more to manage, from the wine cellars to the spacious suites. However, since luxury real estate is expensive, you can expect to sell it at a good price or rent it out at a good rate. We’ve put together the advantages of luxury real estate as an investment:
It attracts wealthy tenants and homeowners
While your tenant or buyer pool will be narrow, you’ll be dealing with wealthy individuals who can afford to purchase or rent your upscale property. Wealthy tenants and homeowners are also more open to paying a premium price for luxury amenities, so you can expect to always make money.
It tends to appreciate at a faster rate
Luxury investments in high-end neighborhoods that have good schools, transportation, and other amenities boast better property values. Because these properties come with must-have features that you can’t find in typical locations, they already have an impressive value the moment you buy them. When it comes to location, they’re the cream of the crop, so you can expect their value to consistently increase over time.
It requires less maintenance
High-end properties are built with premium materials. This means you won’t have to worry about depreciation for a very long time. The paint won’t peel, the tiles won’t crack, and the pipes won’t leak. Since you won’t be spending your money on maintenance and repairs, you can make the most out of your earnings (and maybe even add another property to your portfolio!). And since your property is less prone to wear and tear, you can take advantage of its good resale value, should you sell your property down the road.
How can you invest in luxury real estate?
When it comes to investing in luxury real estate, you can explore a variety of options. You don’t always have to purchase a luxury property that already exists and then rent that out. You can also choose to flip an upscale property for a profit or construct one from scratch. Examples of the paths you can take as a luxury real estate investor include:
Purchase a luxury property
Want to own a luxury property now? Purchase a luxury property that has the potential to be sold at a profit or rented out. Because luxury properties tend to be more well-maintained than other homes, you won’t have to break the bank to make them market-ready. With the low repair costs, you can benefit from a substantial return on investment (ROI) whether you intend to rent or sell.
Luxury properties aren’t typically posted online, so you’ll have to partner with a luxury property management firm to find one. They have access to exclusive sites that specifically list luxury properties.
Purchase a luxury condominium
If luxury estates aren’t your style, you can purchase a luxury condominium. The advantage of luxury condominiums is that they’re near transportation, offices, etc., making them more attractive to tenants (particularly younger tenants) who are always on the go. Luxury condominiums also have sought-after amenities such as indoor pools, improved security, and other services.
Build a luxury property
Among all the options for luxury real estate investing, this is the most expensive and time-consuming one. But despite the cost, the main benefit is being able to choose everything, from the floor plan to the materials. You’ll be able to add desirable amenities such as smart lighting systems, stainless steel appliances, etc., and ensure its design style is up-to-date. This will also enable you to provide VIP buyers with exactly what they want.
Turn a luxury property into a short-term rental
Do you have a luxury property that you rarely use, particularly one in a touristy location? Why not maximize your investment and turn it into a short-term rental? This type of rental is in demand as more people prefer the comfort and convenience of vacation rentals over other accommodations. Luxury vacation properties also provide them with more privacy.
While you’re away, you can enlist the services of a company that offers luxury estate management to deal with things such as tenant communication, rent collection, and more. They can also provide concierge services to make your upscale property stand out from ordinary ones. When you return, you’re free to use it as your personal property.
Is Luxury Real Estate Investing For You?
Luxury real estate isn’t for every investor. This property type is simply too expensive for some. What’s more, their market may not be suitable for upscale properties. However, if your property is in a desirable place (for example, in Key Biscayne), you may want to consider becoming a luxury real estate investor to leverage your location.
To find out if luxury real estate investing is for you, consult the experts at Luxury Property Care. We provide investment advisory services to ensure you put your money into the ideal property. Call us at (561) 944 – 2992 or fill out our contact form for more information.