Luxury Real Estate: To Make the Investment or Not

Investing in real estate offers several benefits and is a common and generally safe way to expand and diversify a portfolio. Whether owning, renting or flipping, investors tend to rely on steady returns, tax advantages and predictable cash flow. Does it get any better than this? Well, if you have the money, expanding into luxury real estate might be a beneficial option.

First, let’s talk about what luxury real estate really is. Commonly, we think of the biggest, best and newest, but there’s more to it. Not all markets are created equal, so the definition of luxury real estate might mean one thing in one area and another across the country.

What makes a property “luxury?”

Location: What’s a luxury home without luxury activities? High-end buyers desire locations in proximity to fine dining, the arts, shopping, and of course, being near other luxury homes. A spectacular view doesn’t hurt either. Whether it’s a waterfront property or beautiful mountain views, the scenery is factored into defining a luxury home.

 Amenities: Luxury homes boast unique features that add the “wow” factor. Grand swimming pools, massive walk-in closets, custom garages, and features that aren’t typically found in your everyday home, like gyms, bars, wine cellars, theaters and bowling alleys.

Cost: The price tag depends on the market, but typically a buyer would need $1 million to buy a luxury property, but this number increases in areas where the cost of living is higher. To date, the most expensive home ever sold in the US is a $238 million New York penthouse sold in early 2019. And who can forget Amazon CEO’s $165 million mansion purchase in early 2020? It might seem that the sky’s the limit in luxury real estate!

Now that we’ve covered the many facets of what makes real estate “luxury,” let’s look at some of the benefits of investing in it. It’s important to remember that with the unexpected hit of the coronavirus pandemic, home prices have since reached record highs, and the demand for homes with amenities to meet buyers’ specific needs for remote office space and expansive outdoor areas has increased.

 Three Benefits of Investing in Luxury Real Estate:

1. Less Competition: Finding the right mansion to flip for a profit might seem like finding a needle in a haystack, but once you spot the right luxury property to remodel, there are less buyers in the luxury-home market competing for it. The pool of people with the knowledge and skills to flip a home of this caliber is small, which provides an upper hand for those investors with the experience in luxury homes.
2. Properties that Hold Value: Maybe you’re considering buying a luxury condo to live in or rent out. Finding a condo with luxury amenities and distinguishing features can hold value and lead to a higher selling rate when you’re ready to make a profit on your investment.
3. Seasonal Income: A vacation rental property in a strong market is a great way to invest in luxury real estate and increase cash flow. Select a property that is suitable for family vacations in the right tourist destinations. In the end, you could have your very own high-end vacation property or future retirement home.

Regardless of the type of real estate you’re seeking to invest in, it’s vital to work with a realtor you can trust. Contact us today at (817) 717- 6036 to get started on your next property investment.

 Sources:

https://www.investopedia.com/articles/personal-finance/092414/investing-luxury-real-estate.asp

https://www.businessinsider.com/most-expensive-homes-sold-in-us-over-past-decade-2019-11#2-according-to-the-wall-street-journal-a-13000-square-foot-beverly-hills-mansion-sold-for-a-record-breaking-165-million-in-february-2020-16

https://www.fortunebuilders.com/investing-in-vacation-rental-properties/