Luxury real estate is the norm around Southeast Florida. These real estate prices continue to rise and while we may not reach what New York's highest price luxury home has recently sold for, a whopping $91 million, many of these high net worth individuals are buying homes as a hard asset or investment.
The wealth of the world's richest people is continually growing, and the potential market for luxury properties is bigger than ever. If you're considering investing in luxury real estate, understand that it is not rare or uncommon. More and more people are doing it, and you might want to consider jumping on the bandwagon.
You are five keys to investing in luxury property.
The term "luxury property" doesn't just carry a high price tag but it is usually unique and exclusive. It is also extremely desirable. You might have a million-dollar home but if the property needs $500,000 of upgrades, not that beneficial to the investor. High-end markets only bring what someone will pay for them. Even luxury homebuyers want some of the simple things the most homebuyers want such as security, practicality, custom design and attention to detail. Whether that is a 10 million-dollar home or $500,000 home, the buyer's needs are the same.
#1. Simple purchase and flip properties.
This can be done with any property including a high-end luxury home. You can flip it for a profit and make an excellent return on your investment. Many of these luxury homes can even be lived in while you are renovating the home and this could be good and bad. The downside is that many other investors will also be bidding on the home as well as simple buyers. The competition among investors is much lower in the luxury market so if you have the cash, you can usually outbid a common house buyer.
#2. Consider a luxury condominium instead of the house.
Condominiums may be less work when it comes to flipping and you still my get a lot on your return for your investment. If the luxury building has a wide range of amenities and is in good or even excellent condition, the only thing you might need to do is work on the inside of the condominium. This means you won't have to worry about replacing the roof or the siding, and you can focus your efforts on the inside, updating, upgrading, and taking that attention to detail to the highest level.
#3. Consider a jumbo mortgage, which just recently has increased.
Even though many luxury real estate buyers choose to go with cash, you can still get a jumbo mortgage for luxury real estate. The current rate for a 30 year fixed jumbo mortgages about 4.25% which is similar to a standard fixed rate mortgage. This might be an excellent option if you're planning on buying, fixing the home up and then reselling at a later time.
#4. Consider a vacation property.
Here in Southeast Florida, this is an excellent place to consider a vacation property or second home for a future buyer. By renovating the home or condominium to meet the maximum level of potential buyers, whether that's a second home buyer, permanent resident or vacation buyer. You can also consider a high-end vacation rental. If you choose to purchase the home and then rented out, Florida has a great seasonal income and they perform well during financial markets. We haven't seen a recession in the last few years throughout Palm Beach County, so investing in a rental home, even in the luxury market, might be an excellent option. There are many business people and families that choose this area for vacations and it's usually several weeks or even months at a time.
#5. Consider completing a custom-built home.
There are a lot of new home subdivisions throughout Palm Beach County including Alton and Sonoma Isles. These are excellent opportunities to complete an existing custom-built home and then rented out or flip it to sell. The only drawback is to be careful on how you customize it. Consider the layout, amenities, materials and finishes that will appeal to a wide range of luxury home buyers or renters. This can also maximize your chances of selling quickly for top dollar.
Investing in the luxury real estate can be more exciting and much more beneficial in the long run but it does take some risk, and it does take a little bit of sweat equity on the buyers part to either for the home or create a cash flow income on a regular basis.
Because I deal specifically in investments and real estate throughout Palm Beach County and I have investments internationally, I can help you find the right luxury home for whatever investment needs you might be looking for. Contact me today.