Investment Opportunities in Luxury Real Estate

Investment Opportunities in Luxury Real Estate

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It’s no secret that the luxury real estate market is a dynamic one—and the most successful real estate professionals are the ones who are prepared to adapt to changes as they occur.

Currently, the market is seeing an influx of high-net-worth individuals who are looking for prudent investment opportunities in luxury real estate. Specifically, affluent consumers are turning to real estate to diversify their portfolios as a long-term investment strategy.

As a real estate professional, you’ll want to make sure you’re prepared to best serve this buyer segment so you can make more sales and grow your sphere of influence in this competitive market.

Reasons People Are Investing in Luxury Real Estate

So, why exactly are high-net-worth individuals looking to buy luxury real estate? According to a Coldwell Banker Real Estate report released in October of 2022, the top reasons for investing in the luxury market include:

  • Diversifying portfolios (46.7%)
  • Long-term investment (46.1%)
  • Financial gain from rental income (45.9%)
  • Inheritance for children (45.3%)

It’s also worth noting that of the participants in this survey, 77% of consumers reported that they currently owned an investment property—and nearly 66% owned two or more properties. For luxury real estate professionals, this means that the opportunity to make a sale is greater than ever.

What Types of Properties Are Buyers Looking For?

There are several types of luxury properties that these affluent buyers tend to be looking for. These include:

  • Multi-family homes – properties that include multiple living units, typically with their own separate entrances. These are ideal for renting out as vacation properties because each unit can bring in its own revenue stream.
  • Single-family homes – properties that are designed as single-dwelling units. These properties are usually stand-alone detached, and can be a great option for those looking to bring in rental income or pass on a property to a beneficiary down the road.
  • Apartments and condominiums – large properties with multiple units, often governed by an HOA or a similar board. These make for excellent investment properties because they tend to come with some included maintenance, such as landscaping and exterior repairs.
  • Townhomes and duplexes – single-family homes that share at least one wall with another home. These properties are often at least two floors and tend to have their own entrances.

By having a solid understanding of the different types of properties investors are looking for (and why they may be looking for them), you can best serve your clients when the time comes.

How to Support Affluent Buyers in Finding Investment Properties

With more people buying luxury real estate, there are growing opportunities for luxury real estate professionals who are prepared to take on this unique segment of buyers. Of course, representing an investor isn’t the same as representing a client who is looking to buy a forever home. So, what are some tips to keep in mind as you aim to support your affluent buyers in finding the right investment properties?

Be Knowledgeable About the Market

Start by knowing the market; this includes not just the luxury market as a whole, but your local market as well. Take time to stay on top of the latest market reports and trends so that you know what’s anticipated both in the immediate future and later down the road. This will give you the insights and knowledge that you need to best represent your buyers and their interests.

One of the best ways to stay on top of market trends? Become a member of the Institute for Luxury Home Marketing. Here, you’ll have access to the monthly Luxury Market Report, a deep-dive analysis that covers all the upper-tier markets in both the United States and Canada.

Consult Your Professional Network

Likewise, make sure to reach out to your own professional network when it comes to best serving an investor client. This may mean partnering with another real estate professional who may have more experience working with the type of property your client is looking for. Ultimately, it’s all about making sure your client walks away from the deal happy, so use your network to make this happen.

Present Properties Accordingly

Remember that investors are less emotionally involved in their search for a luxury property; this may mean adjusting how you present and show properties to these clients. They prefer hard facts and numbers so that they can understand how a property may impact their bottom line, so keep this in mind as you prepare listings.

The Bottom Line on Investment Opportunities in the Luxury Market

Representing investors in the luxury real estate market is a much different experience than what you may be used to, but being able to serve this growing segment of buyers will pay off many times over in increased sales and commissions.

Just remember to tap into your own professional network when needed and to rely on ILHM to stay on top of those ever-changing industry trends.

Reach out to learn more about joining our network today!

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