Investing in Luxury Real Estate
Investing in Luxury Property
Real estate has been considered a sound and lucrative investment for a number of years. Even when the market is fluctuating, there is still opportunity to invest in real estate. The market has gone through many changes over the last decade, offering new opportunities for buying and selling.
Buying and owning real estate can be a good investment, but investing in real estate can be incredibly profitable, especially if you are familiar with market trends. Investing in what may be considered luxury real estate can be even more lucrative. The price tag on a property does not necessarily define it as luxury. Some other indicators may be location, exclusivity, and uniqueness.
Some desirable features of luxury real estate:
- Easy access to activities (shopping, dining, arts, etc.)
- Close proximity to other luxury homes
- Privacy and security
- Custom design, architecture, or other aesthetically pleasing aspects
- Luxury pool
- Chef’s kitchen
- Outdoor living space
- Other top amenities
Buyers who are interested in luxury real estate are seeking the same features as other buyers, but on a grander scale with a higher price tag.
Luxury Real Estate Investment Fund
Many individuals are convinced of the benefits of investing in Luxury Real Estate. However, they need a firm that has on the ground experience in every major luxury real state market. Many luxury real estate investments never make it to the main market with many properties marked and sold via private banking networks and wealth management contacts,.
If the disposal is particularly high profile then specialist brokers will act as buyers agent.
There are many Investment Funds investing in Luxury Real Estate although one of the best and most trusted is Property Secured Investments, winner of the Sophisticated Investor Magazines ‘Best Luxury Real Estate Investment Fund’ award.
Before jumping into the deep end with investing in luxury real estate, it is important to do the market research, determine the type of luxury investment property, and what the end game will be with luxury real estate. There are several paths that can be taken when investing in luxury real estate. You can buy for yourself, buy to rent, or buy to flip. It is also crucial to understand your personal goals in regards to investing in luxury real estate.
Investing in Luxury Real Estate Considerations
- Define your investing goals. Typically, the reason for investment in real estate is the profit or return. Deciding how much time and money you plan to put into the real estate after the initial investment and what you hope to gain from investing are crucial steps.
- Financing your investment. Deciding how you finance your real estate investment is just as important as the investment itself. It is one of the biggest considerations and challenges encountered in real estate investing. You can pay in cash and own the property outright, or you can finance it with a loan that will be paid back quickly if you decide to flip your investment property.
- Market desirability. Before buy any real estate, you should research potential locations and decide if the area is in high demand. Things to consider when researching locations is the job market, cost of living, median house income, cost of comparable homes, and the local economy.
Assessing the demand of your real estate investment is something to keep in mind. Without doing adequate research, you could end up with overpriced real estate that may be undesirable. However, depending on what you choose to do with your real estate investment, there are options for everyone.
Luxury Property Acquisition
Luxury real estate is quickly becoming a hot commodity. The number of developmental properties are creating more interest for buyers and potential investors. As a luxury real estate investor, you could flip a mansion, invest internationally, buy a condo or luxury vacation property, or build a brand new home.
The cost for luxury real estate varies from each market location. In a lower market, a half million dollars could be sufficient to own luxury real estate. In higher markets, a minimum of $1 million may help start the investment, but that cost may go up in areas where there is a higher cost of living.
There is no guidebook on investing in luxury real estate, but by doing your research, you can get a good snapshot of what to do, how to do it, and how much it will cost, as well as potential return on investment (ROI).
Luxury real estate can be a riskier investment than other real estate. In order to make the most out of investing in luxury real estate, consider renting a luxury home, renovating an existing property, looking at international markets, or customizing a luxury property.
Renting a Luxury Home
Plenty of homeowners live in their homes, but some choose to rent out their property. This can be especially profitable with luxury real estate. Some people may not want to take the leap into buying a luxury home, and may consider renting. Renting is an accessible alternative to purchasing. It is important to maintain the luxury property while renting it out to ensure your tenants are satisfied.
Renovating an existing luxury property
Renovating an existing luxury property can be a great way to take an already amazing property and making it even better. Changing the design, architecture, furnishings, and adding other desirable elements can make it stand out and more attractive to potential buyers or renters.
Look at international markets
Location is an important aspect of real estate, especially luxury real estate. People are traveling internationally for luxury homes and vacations. Locations with high tourist traffic may be great areas for investing in luxury real estate.
Customize a luxury property
By customizing an existing luxury property, you can circumvent any potential time constraints. It will also allow you to add personal touches of luxury to every aspect of the home, increasing the potential value of the property. The more unique and individual touches the home has, the more likely it will re-sell for profit, or become a great investment rental property.
Depending on what you are looking for in a home, whether it’s to rent it out, live in, or for strictly investment purposes, you can find it by doing adequate research in the real estate market. Luxury real estate may have a higher cost, but other factors can determine whether it is considered a luxury property.
Investing in luxury real estate can mean buying a home, apartment, or mansion. The appeal could be in the location, seclusion and privacy, accessible activities and amenities, and uniqueness, all that can offer a unique and exclusive luxury real estate experience. Investing in high quality property, architecture, design, furnishings, security, and other elements can be greatly beneficial to investing in luxury real estate.
There are no hard and fast rules for investing in luxury real estate. It is integral to do adequate research and maintain a balanced perspective of the real estate market and learning how to make your investment work for you.
Zanthe Alexander Bentley is a finance veteran with over 25 years’ wealth management experience advising both family offices and institutions on their corporate finance requirements including capital raises (debt & equity), restructurings and M&A activities. He has significant experience in investment management and investment banking and spent nine years at UBS focused on convertible bond arbitrage and equity derivatives.
Prior to getting involved in Asset Management he expanded a small Spanish brokerage from a handful of staff in Barcelona to a diversified brokerage company with over 150 personnel spread across 9 countries, transacting deals from High Grade to High Yield Fixed Income and Loans; Structured Products through to exchanged traded equities.
After taking time to focus on family office activities in Asia, Zanthe-Alexander now leads an ambitious zero-leveraged fund providing exceptional growth and income to Sophisticated Investors.
Zanthe Alexander Bentley Twitter: https://twitter.com/BentleyZanthe
Investing in Luxury Real Estate