Investing in property is becoming an increasingly attractive prospect. And, of course, the most attractive prospect of all is luxury property. When you think of the luxury home market, you think opulent gates, Olympic-sized swimming pools - and big, big figures.
If you’re thinking about getting involved, here are a few pointers to get you started.
You don’t need a million dollars to start investing
The right luxury home is an overwhelming and beautiful spectacle. You know what else tends to be overwhelming? The price tag! A high price is often included in the criteria for what defines a “luxury home”. That may seem like strange and subjective logic, but that’s just the way it is. This may lead you to believe that you need millions of dollars to start investing, but that’s not necessarily the case.
A jumbo mortgage is specifically tailored for investing in luxury real estate. Make no mistake: you need quite a hefty capital. Your credit history needs to be stellar, and you need a strong income. But it does mean your luxury home plans may not be quite as unrealistic as you thought!
You should know what constitutes a “luxury” property
There isn’t a definition for luxury property that is set in stone. It’s important to remember that “luxury” itself is a subjective term. One person’s idea of luxury will be different from another’s. This being said it is possible to identify properties that fit the general definition of luxury in this context.
Just because a real estate agent claims a property is a luxury one, it doesn’t mean the property is actually luxury. An extraordinarily high price tag also doesn’t mean a property is a luxury one. Such a property must feel unique and exclusive. It must clearly appear to really high-end, opulent buyers. If you’re in a metropolitan area, it should be within a short distance of luxury activities. Preferably, there would be other luxury properties in the area. If it’s in a more rural location, there should be a stunning view available from the property. The best that natural beauty has to offer should be surrounding the place!
You could consider a vacation rental
If you get yourself a luxury property, you may not want to move into it or rent it out long-term to others. Something you should think about is providing vacation rentals.
Renting property for a holiday break is becoming increasingly popular these days. Just look at the rise of services like Airbnb! The ‘sharing economy’ is growing stronger by the day and is currently looking unstoppable. And when people want to rent a property for a vacation, they often want something luxurious. If you’ve got a luxury property, you can be making yourself a nice income by renting it out to holiday goers. You just need to ensure that you have your taxes sorted accordingly. There are numerous tax benefits to renting your luxury property in this way. But if the IRS don’t know about this use of the property (as well as your new source of income!) then you could be on the wrong side of the law.