Investing in luxury property might sound glamourous and appealing, but it comes with its own set of challenges and constraints.
If you’re buying a luxury property with the long-term goal of turning it into an investment, it’s crucial to consider that from the very beginning.
Buying luxury means buying a lifestyle, so knowing what your target market will want when you’re ready to reach that point is vital.
Here are some ways to overcome problems faced when buying a luxury property with the intention of flipping.
Keep the End Goal in Mind
If you’re buying a luxury family home with the goal of turning it into an investment property in the future, you could encounter problems down the track if you don’t make decisions according to your goals.
Here are some ways to benefit from thinking ahead:
If you want a property to become an investment, choosing a location that will result in positive gearing is crucial. This is important to keep in mind because you might be drawn to buying where you want to live, rather than where you will make money in the future.
Certain stylistic features elevate a property to luxury level, such as high ceilings and vast windows.
Evaluate whether it would be more financially viable to live in the property as-is and flip it before turning it into a luxury investment property or to buy the property with the essential stylistic features already in place.
Flipping a home gives you time to save up, but large structural changes such as walls and plumbing can be expensive.
Get an Estate Agent From the Beginning
An estate agent specialising in investment property will be able to give you tailored advice from the beginning.
The luxury property market is very different to the standard one. A high-end tenant for a luxury property is challenging to find, so a well-connected estate agent will be able to look in the right places and market your property appropriately.
Most individuals in the high-end market only work with trusted faces in the industry. Unless you are inside the luxury clientele inner circle, it’s uncommon to find a buyer or renter on your own.
An estate agent will know where and how to market your luxury property. Traditional print media is still one of the top advertising mediums for luxury property, but new-age virtual tours are on the rise, too.
Be Prepared To Spend Money To Get Money
Flipping a property can be cheaper than buying a new luxury property for investment purposes because you’ve already paid all the upfront costs, such as stamp duty. And your home will already have considerable equity.
But that doesn’t mean you won’t have to spend money to get your property out there.
Your estate agent will come at a pretty price, but their input is invaluable. Because they work in this industry, take their suggestions very seriously.
Take time to factor the marketing into your budget. The better your luxury property looks in photos, the more enticed onlookers will be.
Going into this project with the end goal in mind will help you visualise and plan the process.
Having a real estate agent specialising in luxury properties in your corner from the beginning can ensure you set yourself up in a way that saves costs in the long term.
The target market for luxury properties is very elite, so being able to penetrate it is crucial.
Do you think dealing with the problems along the way is worth the financial reward of finally turning your home into a luxury investment property?
By Tony Xia
Tony is the director of The Mortgage Agency based in Sydney. He is specialising in a holistic approach to home loans to help the clients with getting the right outcome based on their specific financial circumstances.