Investing in Luxury Real Estate

Investing in Luxury Real Estate

  • Chad Roffers
  • 08/13/18
Buying luxury real estate can not only boost one’s lifestyle, but it can also provide incredible profit opportunities. Ironically, as one moves up the cost spectrum of available real estate in any given area, the competition actually declines among investors and flippers. This lower market competition coupled with far higher potential profits mean that savvy investors can benefit more from exploiting luxury real estate opportunities than anywhere else.

Location, Location, and Amenities

Experts say that the secret behind the immense profits that can be made in the luxury real estate market is that well-off people will always have the means, the motive and the opportunity to buy hot properties. While a high level of apparent luxury is a necessary condition for an investment property, as defined by high-end finishes, high square-footage counts, and location in a generally desirable area, it is far from being a sufficient condition.
True luxury properties will always make solid investments, because, past a certain level of wealth, the potential buyers will be largely insulated from economic downturns and the gyrations of interest rates. But it is important to understand that true high-end buyers are looking for much more than the mere outward appearance of luxury.
Most experts in the field say that in order for a luxury property to reach the point where it is always sought after by wealthy buyers, it must measure up across a range of characteristics. Luxury buyers take for granted that any property they look at will have exquisite finishes like all-stainless-steel kitchens, granite countertops, teak bar tops and high-end carpeting. But they will also be looking at other factors like the overall security of the neighborhood or building, access to pools and rooftop sports decks and having a central location within a city that offers easy access to entertainment and outside transportation options.
Today, standalone homes that have all the superficial trappings of luxury are commonplace. However, in order for a standalone home to be the type of property that will always have a willing buyer, there needs to be something more than just a four-stall garage and a two-story great room. Even a 5,000-square-foot home in Central Michigan may be nothing special. But an almost identical home in the Idlewyld neighborhood of Ft. Lauderdale, Florida, may take on the cachet of a genuine hot property, with a long line of buyers at any time who are willing to shell out millions.

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