If you have the resources, luxury homes are a very profitable investment option. If you’re not up to letting other people grab the comfort of living in it, you can keep it to yourself and dwell in it instead. Choose your purpose with the help of these tips.
Are you looking for new investment opportunities? Are you considering real estate?
At present, real estate has a shortage of supply, high demand, and historically low mortgage rates. These are the reasons that the luxury real estate industry continues to be profitable.
Current luxury real estate trends will likely continue for years after the pandemic. The right high-end property will certainly become a valuable asset, and now is the time to add it to your portfolio.
Investing in real estate needs preparation, especially with luxury homes. The experience can be very stressful if you don’t have the necessary knowledge.
To ensure that you don’t make highly expensive mistakes, check out these seven things you must think of before investing in luxury real estate.
- Your Purpose
Luxury home buyers are usually classified into two categories. One, those who will live in the newly acquired property themselves. Another is those who will turn it into a source of income.
What you plan to do will affect all other factors, so it’s important to understand this before starting your search. The type of property you need, your budget, and the location will depend on your purpose.
Knowing your purpose will help you make the right decisions and give you a clear vision of the estate you will invest in.
- The Home Buying Process
Researching the process of buying a luxury home will make the experience more exciting rather than stressful. You will know what to expect and what potential hitches to avoid.
You will be less likely to fall for too-good-to-be-true deals or unreliable sellers. It can make the difference between finding the perfect house and regretting your purchase.
- Your Budget and Financial Plan
After familiarizing yourself with the process, you need to know how much you’re willing to spend. Your budget will determine your options, whether you’ll buy a stand-alone villa, a luxury townhouse, a waterfront home, your first vacation home, or a gated house within an exclusive neighborhood.
Sort out your finances and calculate every possible payment option. Don’t forget to include any fees that your bank or realtor might require as well as other costs. Preparing the house for rental is sure to garner more expenses.
You will also need a payment plan. Investing in luxury real estate is a huge step regardless of your financial situation, and you will likely need a loan. Do more extensive research to make sure you get a payment plan that suits you.
Compare the home loans of different lenders to see which one offers the lowest interest rate. Come up with a plan that considers your yearly income and how long it will take to pay off the loan. The purchase can be less complicated as long as you prepare.
- Features and Amenities You Want to Prioritize
After figuring out the price range you can afford, you also need to know your priorities. Make a list of the features and amenities that your investment needs to have.
If it’s to be your own home, prioritize your preferences. For rentals, you will have to determine the preferences of potential tenants in the market.
Having a clear idea of what you like and what you can’t compromise on will make the search easier. It will save you time and help in decision-making.
- Location and Neighborhood
Take time to explore the location where you plan to buy. Location is one of the top things to consider when looking for a new home. Investigate the value of other nearby properties. That way, you will know if you’re getting a reasonable price.
Look into the neighborhood and ask about plans for the area. An unsafe neighborhood could affect the value of your property or discourage potential tenants.
Even if the estate itself is perfect, the location could affect the value of your investment in the long term, so make sure to consider this factor.
- Resale Value
Check that the house you are buying has a strong resale value. This guarantees that you can get your money back when you eventually sell it.
Return on investment is also an important factor. Think of how much profit you can get from renting it out. Renovation may be needed to raise the resale value, but make sure that you’ll be able to recover the cost. Put together a plan for getting the most value out of your investment.
- A Trustworthy Real Estate Agent
It’s important to find an experienced realtor to help you purchase the perfect luxury home for your needs. They can spot problems in the property that you otherwise won’t notice, and they will know the best deals. A luxury estate specialist with an excellent reputation will help simplify the buying process for you.
Just like any new venture, investing in luxury real estate can be confusing and stressful. With some preparation, though, it can be much easier. Now that you know what to expect, it’s time to start the exciting search for your luxury home.
About the Author
Serene Yu is the Vice President of New Manila San Juan, the premiere real estate marketplace for luxury properties in the Philippines. Serene is a well-versed writer and marketer that enjoys keeping up with the latest trends in real estate, interior design, and technology. Outside work she enjoys travelling, cooking, and baking
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