Despite today's fluctuating global market, US real estate continues to be a sound investment choice for international investors committed to long-term wealth accumulation. According to a recent article in Reuters, high-end investors prefer luxury real estate, often holding as much as 60% of their portfolio in this type of asset. Luxury property has several advantages over other assets which make it so attractive to sophisticated investors.
Luxury real estate will increase in value faster than inflation. Physical assets, particularly those in luxury real estate with greater demand than supply, appreciate quickly in value. Even during times of inflation when the purchasing power of liquid investments plummets, real estate assets offer protection against portfolio loss.
If structured properly as part of an estate plan, luxury real estate can be transferred from generation to generation. Because real estate tends to increase in value over time, the family’s wealth can be preserved and even strengthened.
You can enjoy your investment as it increases your wealth. Real estate is a versatile investment that can do more than sit in a portfolio accumulating wealth. You can live in your luxury home, use it as a vacation home, or increase your return on investment by renting it out.
How to Get the Best Return on Your Luxury Real Estate Investment
There are certain features that luxury real estate should have to get the best return on your investment. These attributes will ensure that the home continues to be in high demand, increase in value and bounce back quickly after a downturn.
Location, Location, Location continues to be the number one thing to look for when purchasing luxury real estate. You can always refurbish a tired looking home, but you can’t add an ocean view or a Park Avenue address if it doesn’t already have it. There is a reason why the real estate values in top areas for luxury living such as Greenwich, Connecticut, Aspen, Colorado and Palm Beach, Florida continue to flourish. The location practically demands it.
There are excellent sections of luxury real estate available to invest in nearly anywhere you want to go in the United States. Once you have an idea of the geographic area you would like to purchase in, find an experienced high-end luxury real estate agent that has operated in that locality for many years. They will identify the neighborhoods which are considered the most premiere and are best for building long-term value over the long haul.
Concentrate on features that can’t change. An impressive mountaintop view or tranquil waterfront location are much more important than the wallpaper in the master bedroom. And an opulent outdoor deck means nothing if the path of the sun renders it unlivable in the evening hours. It is easy to add value to a home by expanding, remodeling or refurbishing it, but if it sits right under a flight path for the local airport or a few blocks away from an unsafe neighborhood, the investment could be for nothing.
Understand your renovation appetite. In today’s liquidity crunch, the gap between asking price and selling price is widening, and if you are willing to purchase a property that needs some work you can find great investments that are sure to increase in value over time.
If you find a home in a favorable location and are willing to renovate or even do a custom rebuild, your property’s value will appreciate quickly if the taste and design level are equal to or slightly better than the other homes in the neighborhood. Luxury investors crave unique features, but be careful that your renovations are functional and appeal to a full range of high-end buyers, to maximize your investment.
The knowledge and experience of a dedicated local luxury real estate agent are your biggest assets during your property search. Take the time to find a representative that you are comfortable within your chosen locale. They will be your partner as you collaborate to find luxury real estate investments that are right for you and will preserve your wealth over the long term.
Know in advance how you intend to use the property. Will you be living on the property full time, or using it as a second home when you travel for work? Is your plan to rent the house out as a vacation destination? Are you looking at this purchase as a long-term investment or do you want to renovate and resell it for a profit? Knowing the answers to questions like these in advance can substantially increase your return on investment.
When walking properties with your agent, ask them questions related to your intended use for the property. If you expect to live there as your permanent residence, you would be interested in nearby schools, local stores, and restaurants. If you will only be residing part-time neighborhood safety and security would be a priority. Properties intended as vacation investments would require other features as well, such as proximity to vacation activities such as ski or ocean resorts. While each and every one of these things is important to have in high-end luxury real estate investments, you will want to weigh the importance of each depending on your intended use.
About Mary Lu
Mary Lu Tuthill is a dedicated luxury real estate agent for the Los Angeles Westside and an expert in the Brentwood real estate market. Born and raised in Wichita, Kansas, Mary Lu brings a refreshingly genuine, earnest and forthright work ethic to the business of real estate. Touted as the “best negotiator and technician in the business,” Mary Lu has certainly mastered the art of selling, as demonstrated by her 38 years of success as an agent. Honored and appreciated by her clients, and respected and admired by her peers, Mary Lu is all she appears to be: authentic, professional, and honorable.