Investing in high-end, luxury real estate is a smart, stable option as part of a diverse portfolio. This market does tend to have some more ups and downs than the average real estate market so choosing when to buy within a market cycle does matter. However, it is a stable investment that isn’t as vulnerable to fluctuations as the stock market.
Of course, making good investments in high-end luxury real estate will also depend on the financial position of the investor and the ability to find worthwhile investment opportunities. There are investors who lose money on high-end luxury real estate but they are those who buy at the height of the market and sell at the wrong time.
The luxury home market offers a stable investment
Increasing inventory and the demand for high-end luxury properties gives buyers the upper hand when it comes to negotiating. Even if investors get into the market at the wrong time, high-end luxury real estate in great destinations will be a safe investment over the long term and will recover over time because there are only so many highly sought after destinations in the world.
When luxury properties are situated in the most attractive areas, investors can charge higher rentals and make more return on their investments. Kihei in Hawaii, for instance, is close to some of Maui’s best beaches and the average occupancy rate is high so most investors see a great return from vacation rentals.
These condos have impressive vistas of the Pacific Ocean and exclusive amenities. Real estate buyers can find condos in Kihei for sale in both the southern or quieter northern parts of town.
Investing in a lifestyle
Many investors get lost in the macro market landscape but getting down to the specifics of a luxury property in terms of neighborhood, the price per square foot, price-to-rent ratio and more is necessary to make the right decision.
Whether an investor buys a luxury condo to live in or to rent out, spending on one located in a luxury building with amenities and transportation options nearby is the way to go.
Even the services and features the building offers can make or break an investment. Buying high-end luxury real estate is investing in a lifestyle. When investing in condos, infinity swimming pools, private roof decks and fitness centers in common spaces are just some desirable features.
High-end luxury real estate is found in some of the most desirable locations in the world. It is usually large in size, designed with custom architectural details, constructed and finished with high-end materials and with superior amenities. High-end buyers want access to activities such as high-end dining, shopping and the arts.
Investing in a luxury vacation rental can provide many benefits such as asset appreciation, tax deductions and personal enjoyment.
Investing for the long haul
Some investors prefer to make a profit by timing when they enter the market and when they sell. If they want a 15% to 20% return in about five years, they need to select real estate that is likely to quickly increase in value. Trying to make quick money when investing in real estate can be risky.
Investors who hold on to an investment in high-end luxury real estate can ride out any volatility. Unlike the stock market, where many factors are out of their control, an investment in high-end real estate is relatively stable. It is possible to build wealth by buying as it offers great return rates and tax advantages.