How to Find a Great Luxury Real Estate Investment
The potential market for a luxury real estate investment is larger than ever and, if you invest in the right property, you can expect big returns. Here’s what you should know before you get started.
Before you invest, it’s important to understand which features characterize a luxury real estate investment. Senior vice president of operation oat One Queensridge Place states that a luxury property must be desirable in order for the investor to make a profit, “It has to be unique and exclusive, in a good way in a desirable way. People who are wealthy will pay a premium for something that’s perceived to be superior.”
High-end buyers want privacy and security, sometimes to the point of seclusion. They are looking for luxury amenities as well such as wine cellars, luxury pools, centerpiece kitchens, and expansive master suites. According to Investopedia, “In Malibu, Calif., for example, the average luxury home has more than 4,000 square feet (and a $6 million-plus price tag).”
Mark Fitzpatrick, CEO of RUHM Destination Marketing, says that it’s extremely important to think about the aspects of the luxury real estate investment that can’t be changed when buying luxury property, “You can’t change the path of the sun, the location of the ocean or the fact that there is a flight path for large airplanes over your head. Ugly wallpaper in the bathroom is far less important than the weather.”
According to Christie’s International Real Estate’s annual Luxury Defined report, Los Angeles ranks fourth in the world.
Investopedia reports, “The highest price for a luxury property in Los Angeles in 2015 was $60 million for the Paradise Cove Estate, a single-family home in Malibu. LA’s average price per square foot for $1 million-plus homes was more than $1,000 in 2015, well behind New York but comparable with Singapore.
Los Angeles saw about 4% growth in luxury home sales in 2015, a slowdown compared with 2014 (when sales grew by about 6%) and 2013 (when sales grew by nearly 40%). The city has the highest-priced property listing worldwide as of May 1, 2016, at $500 million for the Nile Niami Bel Air Spec Home. It also has the fifth-highest listing, the $200 million Playboy Mansion. The mansion could be tricky to sell, as owner Hugh Hefner plans to continue living there even after the sale, according to NPR.”
There are many ways to invest in luxury property and, when it comes to financing, hard money loans are your best option. Hard money loans are for short-term investment projects and, if you find the right property, you can expect to make solid returns quickly. Before you buy, you should make sure that you understand which features add long-term value in this asset class to get the best return on your investment.