What Makes A Good Luxury Real Estate Investment?
Are you in a position to invest in luxury real estate? Then take it from us: it can be a trick game. Indeed, there are many factors to think about when you want to invest in luxury real estate, but the number one thing to realise is that not all luxury investments are created equal. Some are better than others, and the market itself can be extremely volatile - what you thought was a good investment today might be the worst way to invest your money in a month’s time.
Which means you need to know, firm and simple, what makes a good luxury real estate investment. We’ve got some pointers below for you to start with, but never forget to follow your own gut on this either. Take your time finding the right luxury investment, and make sure you’ve got your real estate goal in mind.
If you want to invest in a luxury property that’s worth your time, you’re going to need to pick your moment just right. And depending on the budget you’re working with, as well as the market you’re moving into, a lot of different factors can play into this. However, some general rules remain the same.
For example, most people quote the winter season as being the best time to score a low price on an otherwise stunning property. After all, this is the time of year when people are most focused on other things - Christmas, spending time with family, dealing with the festive selling season if they’re a business owner, etc. And all of these distractions can play into your favor, and reduce the market demand as it stands.
However, you’ve also got the chance to score an amazing luxury deal like those luxury property expert Joe Sitt would snap up during the spring season as well. This is the time when supply and demand goes steadily up, and if you’re someone who has spent the last few months securing a mortgage and/or working with local contractors to get trade experience on your side, you’re going to be in prime position. In short, you’ll get first pick!
When you want to invest in such an upmarket asset like a luxury property, you’ve got to be aware of the market you’re moving into. What kind of market is it? Does it move fast or slow? Are you sure your money will be best invested here, despite its luxury status? We all know that if there are more buyers in the market than there is anyone wanting to sell a house, those properties are going to be snapped up quickly.
But on the other side of this is an influx of sellers - it’s hard to find a good value in a market where listings outweigh the number of closures. However, you can get around this potential issue by considering the location itself: is it a sought after place to live? If so, you may still have a good chance to secure the investment property of your dreams here. Take Los Angeles as a good example of such a city; plenty of property up for grabs, plenty of people willing to lay down millions for each home.
Aside from this, doing a bit of research into how the market is moving is your first step. Think about it: where do you want to find your luxury real estate investment? Head online to websites like Zoom Property to check out the area - what do you notice? Sure, the price points are high and the properties look good, but how many are there, and how long have they sat on the market?
The condition of the luxury property matters, of course, but not for the reasons you may think. You may want a house that’s all ready to go, that you don’t have to change much in before selling for profit, but that’s not all there is to it.
Indeed, if you know about a property’s condition before going into the sale, you’re going to be on the upper foot. You’ll have the chance to not only negotiate with the seller to pull the asking price down, but also the chance to characterise the property in any way you see fit. And if you know there’s a strong market for the mid century contemporary style right now, this is your time to capitalise!
So it’s not a bad idea to invest in a ‘fixer upper’ property, as long as you know the repairs themselves aren't extensive. To make sure of this, get friendly with local conveyance companies and/or estate agents - the more networking connections you have, the easier it’s going to be to tackle a property that’s in poor condition, even with that luxury price tag on top.
Finally, you’re going to have to think about the estate agent you work with as well. As we mentioned above, it’s a good idea to get friendly with some local firms, to ensure you hear the market news before anyone else. But aside from that, you need to know you’re working with someone experienced; they need to have the gift of the gab, but the knowledge and experience to back it up.
You’re here to build a portfolio, after all, and that can’t be done when the agent themselves is only concerned about their own commission, or the seller’s profit. Property investment can be a tricky game, and it’s best to work with a specialised branch of agents that know how luxury real estate moves. It can be quite different to the regular market, and if you’re just dipping your toes into the pool now, you’re going to want to reach out to those who know best.
A good luxury real estate investment can take many forms. However, some things tend to remain the same: the price you pay, the time you buy, how long you flip for, and the agent you work with. Don’t take any of these factors for granted when building your investment portfolio.