According to director of real estate development Brad Zackson investing in real estate can be a great way to build long-term wealth and earn cash flow. There are several investment routes to consider when investing in the real estate market. One type of real estate market that has continued to provide significant returns on investment is the luxury market. Zackson offers tips to those looking to invest in luxury real estate.
Markets and Locations
Brad Zackson reminds investors to remember the age-old adage, “location, location, location,” when investing in luxury real estate. Like any other type of real estate, you will need to find a location that is high in demand and has the income demographics to support higher rents and sales processes. Some of the top luxury real estate markets today include New York City, where Dynamic Star is located, San Francisco, and Vancouver.
Growth Potential
While you want to find a property in a desirable market, consider the growth opportunities, Brad Zackson suggests. Today, there are many cities that offer great opportunities for future growth in the real estate luxury sector. Look for cities and locations that have increasing job demands, improving levels of real estate values, and other factors that make them poised to support more luxury properties. Cities such as Seattle and Denver have continued to see growth in this sector of their real estate markets.
Consider International Buyers and Tenants
In a traditional real estate market, many of your potential tenants and buyers will be people who actively live in the city where the property is. However, when it comes to luxury real estate, your potential pool of buyers and tenants is much wider. While many local residents may not be able to afford the higher prices, there will continue to be a lot of demand from international buyers. Because of this, you should find unique ways to market to these investors.
Competitive Advantages
Once you have targeted the building or property to buy as a luxury real estate investment, you should continue to look for ways to add competitive advantages to make it more attractive to potential buyers. For your luxury real estate investment to succeed, you will need to take steps to improve its value. Some of the best things to do are upgrade the units to the most modern style, add new and desirable amenities, and other enhancements to a tenant’s living experience.
Know Downsides
Zackson warns that while there is a lot of potential that comes with luxury real estate, there are also downsides. During a recession, luxury real estate can be hurt more than other real estate types. Whenever you are building any financial models, you will need to make sure that you properly include an analysis that will take into account predicted downturns in occupancy, rents, and other factors. This will give you a conservative financial picture.
