Invest In Luxury Property

Luxury property investments—upscale, classy, and exclusive rentals in affluent areas—are on the rise. Tenants and property managers alike are seeking the many perks of luxury real estate, so for those looking to get a piece of the pie, we’re here to help. If you want to diversify your portfolio by providing high end properties for your tenants, then there are a few things you’ll need to know.

What Makes a Luxury Property?

Understanding what constitutes a luxury property investment is vital to your successful management of them. Of course, one imagines penthouses and grand chandeliers when picturing luxury rentals, but what are they really? What are tenants expecting of you and your property? What are you expecting of tenants?

Below, we’ll dive into a few key aspects of luxury properties for real estate investors to consider.

Cost

A key aspect of luxury real estate investments is, as expected, their elevated cost—both for you and tenants. Purchasing and maintaining a luxury investment is costly, but oftentimes worth the reward for both parties. You should expect to pay more when purchasing luxury rental property, but you’ll generally have much higher paying tenants in return.

Size

Larger properties are not always indicative of luxury property investments, but they do tend to be a factor. Especially in urban areas, you can expect your tenants to want space. Whether this be in the units themselves or in shared spaces, luxury homes tend to have very breathable floor plans. However, size is only one factor. Regardless of the rental’s size, you’ll want to keep in mind the many other factors that create each luxury investment.

Location

When tenants look for luxury real estate, they look for location. Is it in an upscale area? Is the neighborhood historic? Are there nearby attractions, parks, or restaurants? Do they have an impressive view of some sort? If you’re looking to purchase luxury real estate, you’ll need to consider what might draw them there—you’ll need a desirable and prime location.

Amenities

Another key aspect of luxury real estate investments is their amenities. Luxury tenants want more than just a place to live; they want a place to live that is convenient and glamorous. Pools, private gyms and spas, restaurants, cleaning services, and more are all highly valued amenities in upscale areas. Plus, within the units, you’ll want to integrate cutting-edge technology—think smart appliances and home automation such as automatic lights, heating, etc. This not only attracts tenants, but increases luxury property values, too.

Aesthetic

Many people on the market for luxury properties are also seeking an elegant and upscale aesthetic. Luxury property investments with unique designs, famous architects or designers, and exceptional architectural aspects all play a role in creating a sophisticated ambiance. Remember that for these properties, appearance and presentation play a large factor. You’ll want to create and maintain an elegant environment in your luxury real estate investments to cater to your tenants with higher standards.

Exclusivity & Safety

Luxury tenants want to live in a space that is exclusive and safe. A large part of the luxury investment allure is centered around upper-class exclusivity. Therefore, you want to keep your properties as secure and private as possible, as luxury tenants generally don’t want non-tenants around their homes. This partly comes from a place of safety, so having a security team or high-tech security features is another important aspect of luxury living.

Building Materials

Tenants will expect their luxury properties to be built with some of the best materials, so it’s important that you don’t cut corners. You want quality materials that last in order to create a quality investment. When managing a luxury investment, it’s always best to go the route of classy and functional.

Recent years have also seen a rise in eco-friendly properties, which many luxury tenants value in an effort to lower the impact of their waste. Sustainably built and operated properties are great for both the environment and your business, so go green whenever you can. To give your tenants peace of mind, look into LEED, BREEAM, and Energy Star certifications.

Raising the Bar

If your luxury tenants wanted to live in non-luxury apartments, they would. Owning luxury real estate investments means creating a team and an atmosphere that goes above and beyond. Your upscale properties and amenities should always reflect what you can provide your tenants and not the other way around.

With all the previously discussed factors in mind, you should always be asking yourself if there’s another way you can raise the bar of expectations for your tenants. By always going above and beyond, you foster an environment where tenants will feel inclined to do the same for you.

Why You Should Invest in a Luxury Investment

Now, given all of these factors to consider for your tenants, let’s discuss why luxury property investments benefit you.

• They’re a great way to diversify your portfolio, since it’s always best to have an array of diverse investments if you want to keep your real estate investing funds secure. As higher-scale rental properties, they’ll allow you to be a part of a more stable market, even in the wake of economic instability.
• They provide a large amount of passive rental income for you and your business. Luxury tenants are willing to pay more for the amenities you offer, and they’re generally less likely to pay late or miss payments. Rent for luxury properties tends to be around 40% higher than for non-luxury properties (and depending on your location, it can even be twice as much), so your expected profits are the real deal. The more you put into the property, the more you get out.

Getting Started

To begin your luxury investment endeavors, you’ll need to research regions of interest. Make sure there’s an existing luxury real estate market for wherever you plan on managing one—populated and booming cities like New York, Los Angeles, Chicago, etc. are good places to start. With a location in mind, you’ll want to start researching market trends. Is now generally a good time to buy, or should you wait it out a little?

Additionally, you’ll want to analyze a few predictive reports, such as a rental pro forma statement, which will help you estimate your prospective property’s success. It’s also important that you have a very solid grasp of your business’s current finances, as luxury property investments are not the easiest place to start.

Ensure that your books are up to date and your liabilities are manageable. If these tasks sound like shuffling through stacks of paper to you, then you may need a tool that can facilitate better organization, which we’ll dive into below.

Simplifying Luxury Property Investments

As anyone can see, managing luxury real estate investments is no small task, even for the most experienced real estate investors. To make the best of your business, you’ll want to spend more time with the big picture and less time with the gritty details. Fortunately, there are tools that can make even your bookkeeping as luxurious and convenient as your properties.

Rental Property Accounting Software

Ledgre’s innovative rental property accounting software has the power to automate your bookkeeping process while offering key metrics and insights into the performance of your business. With secure bank account synchronization, Ledgre automatically imports your transactions, tracks expenses, and auto-categorizes them for your convenience. Additionally, Ledgre can link to your mortgage, loan, and credit card accounts, keeping you that much more in touch.

Need tax assistance? Ledgre raises the bar by helping you generate tax forms such as your Schedule E and Form 8825 in minutes. Plus, throughout the year, we’ll help you to generate financial reports like profit and loss statements, keeping you more in touch with your finances than ever.

Getting started can be as simple as uploading a CSV file or connecting your bank or property management software account. It’s truly never been easier to stay on top of your finances so that you can make the best data-driven decisions possible.