There isn’t a set mold, in terms of size, architecture or anything else, that really defines what a “luxury property” is. The term itself will conjure up completely different images in different people’s heads. Still, whether it’s a sprawling European mansion or a smaller contemporary home nestled in the hills of California, luxury properties are certainly a tempting prospect for many property investors. If you want to seize your own piece of this market, here’s some advice for doing it the right way.
Find the Right Agent
If you’ve got your heart set on investing in luxury property, you’ll need the help of a qualified real estate agent, who has a healthy track record within the luxury market. They’ll be a big help in finding those properties which are available to buy, but not necessarily that easy to find for private buyers. If you find an estate agent who’s already pretty established in the luxury property niche, then they may have some very valuable information on a listing before it actually reaches the public market. They’ll also be a big help in determining or projecting the market value of the property in question. Most real estate is valued through comparables – similar properties which were sold recently and in the same area. Luxury properties are usually pretty unique for their area, which makes determining value a real challenge in some cases.
Find the Right Market
When you’re looking to invest in luxury homes with luxury price tags, it’s also extremely important to make sure there’s a demand for what you’re planning to sell. Testing the waters of any given market before you start actually looking at listings is always a good idea. If you’re looking to buy in a built-up metropolitan area, then you’ll need to consider the local job market, the cost of living, the prices of any comparable homes you can find, and the future economic outlook for the area. On the other hand, if you’re leaning more towards properties in quiet vacation areas, you’ll need to think about the kind of traffic that the area gets in the height of summer, and all year round.
Another major obstacle you need to consider when it comes to buying luxury property is the fact that the mortgage process typically takes a lot longer than it does for typical, smaller mortgages. Even if your personal finances are in pristine condition, it can still take between 45 and 60 days to secure the loan. Because there’s more time involved, and the sellers of luxury properties usually only talk to qualified buyers, a lot of real estate agents will recommend talking to your mortgage broker, loan officer, or banker to secure financing approval early on in the process. I know that this isn’t the most exhilarating part of property investment, but neglecting it can really come back to bite you in the long run.
When investing in luxury property, it’s essential that you source all the right help, and do your best to determine present and future demand. Fail to do this, and you’ll just wind up with an expensive asset that’s incredibly hard to shift!