Hi Boox Popular Magazine 2024
You can choose any type of property to invest in, but when you buy luxury property, you’re getting a better deal. Like all real estate investments, luxury homes are a long-term wealth-building strategy, and while they do cost more than standard homes, here’s why they’re a better investment.
1. You can get high-end property management services
No matter what properties you own, having a property manager is essential. You don’t have time to waste being a landlord, so you’ll be more profitable when someone else handles those duties. However, you can get better property management services for luxury homes.
Technically, you could pay a property management company to do anything for you, but certain tasks aren’t financially worth it when you own standard rental properties. For example, it makes sense to have your property manager handle your bills, but that extra service may not make sense if you’re not getting a big enough return on the property.
With luxury properties in your portfolio, you can justify the expense more easily, especially when you plan on acquiring more investments.
2. Good things are worth waiting for
You’ve probably heard the phrase that good things are worth waiting for. It used to be a slogan for a popular brand of ketchup, but it’s applicable to owning luxury property, too.
The buying process will be longer, but it’s worth the wait. There are generally fewer luxury properties on the market, so finding the right one will take more time than usual. This makes investing in luxury real estate perfect when you aren’t looking for property to buy immediately. Even if you want to buy now, it’s still worth considering.
Another factor that will slow down the buying process is the need for due diligence. It’s critical to research everything associated with owning luxury property if you haven’t already. There are fees you might not be used to covering, like landscaping, and general repair costs can be much higher than you’re used to paying.
3. Luxury properties are more profitable
Owning a luxury property means a higher mortgage and down payment. Don’t let this scare you, though. When you put more into a property, you’ll get more out of it in the long run. High-end properties attract wealthier tenants who are willing to pay more in monthly rent. Over time, you’ll earn higher profits from each of your high-end properties.
Repair costs for luxury homes are generally lower because high-end tenants tend to maintain their homes well. You won’t find many instances of random holes in the wall or trashed carpet. Accidents do happen, but they’re far less likely to happen inside of a luxury home. Because of this, even wear and tear is less, simply because a well-maintained home will last longer, even through normal use.
While you could buy multiple standard properties to generate higher profits instead, it will take far more work for such a little return from each. The more properties you have to manage, the more complicated your life will become. If you have the credit and available funds, it’s better to invest in fewer, high-end properties to condense your responsibilities and energy.
4. The luxury market has more stability
All housing markets fluctuate, but the luxury market is more stable. Most high-end homes are constructed with high-quality materials from the start and don’t depreciate as fast. On top of that, having a professional property management company take care of your properties will give you peace of mind.
5. You’re more likely to find great tenants
Finding the ideal tenants for a standard rental home isn’t easy. Even when you have high standards and thoroughly screen tenants, sometimes bad ones slip through the cracks. That’s because you can’t tell how someone behaves based on their credit score.
You could get a tenant with a 700+ credit score, only to watch them destroy your property in retaliation after you raise the rent. Someone with a perfect background check and a high credit score might end up intentionally violating the lease, like sneaking illegal pets into their home. The chances of having to evict or sue a tenant in a standard rental are pretty high.
On the other hand, people with higher incomes generally don’t have the destructive habits that lead to evictions and lawsuits. That doesn’t mean it won’t happen, but it’s less likely.
Secure a more profitable future with luxury property
There are many reasons to buy high-end property, but long-term profitability is the best. When you invest in luxury property, you’re ensuring a better – and bigger – financial return on your real estate investments.
