Introduction
Planning to invest in luxury real estate? It’s a smart decision, as you can reap higher benefits in the coming years. However, you should consider several things before putting your hard-earned money at stake. Learn about the ins and outs of the luxury real estate sector before plunging into the investment journey.
Investing in real estate can expand and diversify your portfolio while creating a sustainable passive income source for yourself and the next generation. If you are a high-net-worth real estate investor, it’s a good idea to expand your horizons and look beyond the usual fix-and-flip option. Entering the luxury real estate market would be a wise decision, for which your future self will thank you.
6 Tips for Investing in Luxury Real Estate
Here are a few tips to help you make the right decision that will pay off big time. Making hasty decisions and not doing proper research may turn your real estate investment into a nightmare. You certainly want to be happy with your decision later, so we hope the following suggestions and expert advice will help you find the most suitable upscale property.
1. Identify your Goals
First and foremost, identify your investment goals. Determine your purpose and the end result you wish to achieve. Usually, the most common goal of luxury apartment investors is to earn a high return on their investment. Understanding your objectives will help you make more informed and smarter decisions. Also, it will save you from making hasty and bad investments that you might regret later.
Think about what you wish to get out of your investment. Is it for getting a high return value, simply to gift yourself and your family a premium apartment, such as a holiday home, or to help your family live a luxurious life? Try finding answers to similar questions to understand your luxury real estate investment goals.
Once you have identified your property investment goal, consider options to maximise your profits. You can either renovate or remodel an existing property by flipping it into a luxury property and releasing it back on the market. Or, you can buy a finished luxury apartment or build one from scratch. If you are putting your home up for sale and it sells quickly at your listed price, you can have a significant amount of cash in hand in a short period of time.
On the other hand, if you are looking for long-term investment options to generate decent income consistently over the upcoming years, consider buying or building a high-end vacation home or a multi-unit apartment, which you can rent out. Furthermore, if you want to explore the depths of the luxury real estate market, you can custom-build a luxury residential project to sell or put it out for rent once it’s complete.
2. Look for Unique Amenities
Luxury homes are synonymous with comfort, opulence, and aesthetics. While touring several properties, feel the ambiance and vibes of the property too. Check out the apartment amenities you are getting and whether you are able to feel the comfort. The more amenities the property offers, the higher its value. Plus, you will need to make fewer upgrades later, thus saving money.
Luxury home amenities can include numerous things. For example, a spa-like restroom is a highly-demanding luxury upgrade that most investors are looking for. This kind of bathroom encompasses a freestanding soaking bathtub, a steam shower, and a bidet. To increase your property’s value, you can go on to add heated floors, warming racks for towels, and anti-fog mirrors.
Invest in smart homes that are driven by technologies such as artificial intelligence (AI), machine learning (ML), and the Internet of Things (IoT). Intelligent homes feature multiple intelligences and synchronized devices that one can control remotely from a smartphone or tablet.
Today, everything from home lighting and thermostats to even door locks can be wirelessly controlled and upgraded using modern technologies and smartphone apps. Besides, with the prevalence of smart home devices like Amazon Alexa and Google Hub, you can increase the value of your property. These smart gadgets and technologies can provide comfort and ease of living.
3. Location is Key!
Location is one of the most vital aspects to look for while investing in a luxury property. Choose a desired property location in a convenient area to increase its resale value. Find properties in neighborhoods close to shopping complexes, supermarkets, restaurants, entertainment hubs, activities, and other desirable amenities. Investing in a condo or apartment in a prime location will ensure higher returns on your investment over the upcoming years.
Always choose the right market. Look beyond the mere zip code. Consider factors like premium infrastructure development and convenient connectivity to the area. Ensure there’s good demand for the apartment’s location to make it sell faster. Check the market’s temperature and shop around before making a huge seven-figure investment.
Moreover, if you are investing in a major metro city, consider factors like the job market, sales prices of similar homes, cost of living, median household incomes, and the overall economic state of the area. Similarly, if you are targeting a luxury vacation rental market, think about the traffic availability and commute conditions during peak hours and year-round.
4. Consider the Construction Quality
Pay close attention to the construction of the property, such as the quality of the building materials used. Choose well-built and well-designed houses that are not just visually aesthetic but also ensure high durability, thus retaining their value over time. Carefully inspect every inch and corner of your chosen property before closing the deal. Take help from a professional home inspector who can guide you during the inspection phase.
An experienced property inspector will help you identify the loopholes that might be present in the property’s construction. Quality construction could mean multiple things, and the definition might vary among different people.
While some investors may put more focus on the building’s craftsmanship, others may emphasize the quality of the construction materials used. Ask the property owner enough questions about the specific building materials used and get their brand names too. This way, you can get an idea of the durability and withstanding power of your building.
5. Security Systems
Luxury apartments would be incomplete without high-quality smart home security systems. Check whether your new apartment includes one or more of the following smart security devices and controls.
- Motion sensors/Activity detectors
- Audible sirens
- Access limitation devices and tools
- Smart doorbells
- Glass-breaking sensors
- AI-powered smoke alarms
- Smart lights
- Intelligent locks
- Voice assistant
- Emergency buttons or switches
- Surveillance cameras
- Smart doorbell cameras
- Monitoring service
The global residential security space is increasing at an annual growth rate of 24.58% and is projected to exceed a whopping $13 billion by 2027. Today, the smart home count has hit 258.54 million, which proves that residents are recognizing the importance of installing smart security systems to maximise residential safety.
The global residential security space is increasing at an annual growth rate of 24.58% and is projected to exceed a whopping $13 billion by 2027. Today, the smart home count has hit 258.54 million, which proves that residents are recognizing the importance of installing smart security systems to maximise residential safety.
The truth is that residential safety is no longer a luxury; it’s a necessity. All homes need at least some basic security devices. And for luxury apartments, smart security systems will help justify the worth you are paying.
6. Schools Should be Nearby
Just like you are choosing a location close to great entertainment options, great connectivity, hospitals, supermarkets, etc., you should also consider educational institutions in the vicinity of your home. Check whether reputed and accredited schools and colleges are within a convenient distance. New or potential parents will want a property close to renowned schools. So, invest in an area that offers a promising lifestyle and has huge potential for future growth and development.
A Few Things to Remember Before Investing
Apart from the above tips and recommendations, here are a few things you should know about the luxury real estate industry.
- Luxury real estate is not considered luxurious just because of its high price. For a property to get the “luxury” tag, it should be unique, have a touch of exclusivity, and be perceived as something superior. The money you are paying should be worth all the luxury amenities, smart technologies, and other upgrades you are receiving. Many people are willing to pay a premium in exchange for a superior house. So, a high price tag won’t enlist a property in the “luxury” category.
- There are multiple ways a real estate investor can invest in a luxury property. For example, they can remodel and upgrade an existing apartment into a mansion, buy a luxury condo, purchase a high-end vacation home, invest in international properties, or even build everything from scratch.
- High-end home buyers look for easy access to luxury dining experiences, shopping, art galleries, and proximity to similar neighborhoods and apartments. Many luxury real estate investors even seek proximity to natural beauty, such as a waterfront location with a lake, river, or ocean view. Others prefer mountainside or countryside views.
- High-end luxury apartment investors look for all the common features regular properties have but on a premium and grander scale. They look for added security and privacy. Sometimes, they even wish to remain secluded from the hustle and bustle of urban life. They are ready to pay a premium price for aesthetic interiors and exteriors, custom architecture, minute attention to detail, custom designs, and opulent finishes.
- Some luxury apartment buyers look for additional amenities, including luxury swimming pools, chef’s kitchens, expansive owner’s suites, car lifts, home automation, outdoor living space, and temperature-regulated wine cellars. Others wish to have enough space and won’t desire a massive apartment to live in luxury. Even a medium-sized apartment space can be luxurious, provided it comes with premium features and upgrades.
- Coming to the question of how to pay for your chosen luxury apartment, there are two options. You can either pay in cash, as many luxury home buyers do. Or, you can get a jumbo loan and make a good down payment. Plus, you should work towards improving your credit score, submit the necessary proof of assets and income, and have substantial cash reserves to back you up in times of need.
- Look for timeless designs, amenities, and features while investing in luxury apartments. Pay close attention to the different architectural materials and elements that went into the construction of the building. By choosing a timeless design, you can ensure a good ROI when you plan to resell it sometime in the future. A timeless design can appeal to a wider spectrum of potential home buyers.
- Abstain from investing in mundane, cookie-cutter homes with the usual constructional designs and patterns. People look for something unique to justify the premium price they are paying. Add an exclusive appeal to your home to add value in the long term.
- Also, never settle on property photographs. Do a proper physical house tour, even when some property owners provide 360-degree virtual apartment tours. You might not determine the property’s amenities, area, and features appropriately without visiting the home in person. What’s more, some luxurious properties may look not-so-appealing in photos. So, trust your eyes and perception rather than pictures that may give you an erroneous perception.
Conclusion
Although real estate has been considered a relatively safe investment option, you should still be cautious. Do your homework well and inspect your potential property carefully before signing any contract. If you can afford it, it’s always the best decision to invest in the luxury real estate market, which is in high demand in modern times.
So, research prospective markets thoroughly to understand whether there’s sufficient demand in your chosen market to justify your investment. If the market demand is low, you may face challenges in turning your investment into a decent profit.
Whenever in doubt, consult real estate professionals, such as brokers/home inspectors, or financial advisors, to make better investment decisions. A financial advisor will help you identify your investment goals and determine your financial situation to arrive at the best solution. Good luck with your luxury property buying experience.