What Motivates the Wealthy to Invest in Real Estate?

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Wealthy individuals have been investing in Real Estate for centuries, from the acquisition of land to high-end luxury condos. Motivations for investment however, tend to differ from client to client.

By understanding the cultural preferences and financial motivations of investors and offering top class advice and service, advisors can tailor their approach to form and cement long-lasting and mutually beneficial relationships.

Here are some of the most common investment motivations among high net worth individuals.

Security

This motivation tends to come along with more of a buy-and-hold strategy according to On Property Australia. These investors 

are looking to secure their financial future and the futures of their families.

Typically you will find that this type of buyer is not a big risk taker and is more interested in a property that is going to experience slow and steady growth in its worth.

For buyers looking to invest for security, we recommend showing them locations in capital cities that they can hold for long periods of time and watch grow.

 

Portfolio Diversification

Diversification of one’s portfolio is another popular reason for real estate investments. Investopedia states, “Real estate has a 

low, and in some cases, negative, correlation with other major asset classes. This means the addition of real estate to a portfolio of diversified assets can lower portfolio volatility and provides a higher return per unit of risk.”

High Growth Property Investments

The individuals seeking high growth properties are looking to increase their net worth. The idea behind these types of investments is that the client will be able to scale their investment and gain equity – fast!

Being fully aware of your market, as well as others, through consistent knowledge, great connections and keeping your finger on the pulse about upcoming opportunities, as well as the ups and downs of the real estate market is key to finding these high yield investments.

Lifestyle

Another huge motivator behind real estate investments is a lifestyle choice. We’ve written on the importance of holiday homesbefore, but they come into play again when looking at what motivates investors.

While this investment is one that will reap financial gain, the key motivation for these types of investments is an investment in lifestyle. These clients are looking for something that will make their lives better.

 

How do you Connect with Real Estate Investors?

Securing an investment that is safe, reliable and will provide a steady form of income as an appreciating asset is often key to their decision process.

However, investors are seeking not only a sound financial perspective but also an investment that fits their lifestyle and personal preferences.

So, as a real estate advisor, ensure that have done your research and have a good insight into your investor’s requirements as well as their preferences.  In this way, you will be able to offer the right advice and recommendations, together with providing a streamlined process and careful due diligence that will afford you the long-lasting respect of your investor.

 

For further information about working with the high net worth investors, The Institute provides access to its members to an array of resources and tools within its Member Portal.

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