Investing in luxury real estate

Apr 08, 2022
investing in luxury property

The price tag isn’t what makes luxury real estate ‘luxurious’. It’s about exclusivity, uniqueness, location and artistic quality, which when combined, add value to a property. Luxury real estate is an investment that offers continuous cash flow, enhances portfolios, and allows you to take full control on your asset. Also, since property prices are increasing over time (especially in the UK), you have the potential to generate a large profit at resale, or a continuous passive income through buy-to-let properties.

Lux property investment

Real estate has long been a stable international investment and the UK market in particular, is considered one of the most safe property markets globally. As market prices go up, it is worth researching investment strategies into luxury property.

There are several different ways people invest in luxury real estate:

House Flipping 

Flipping is when an investor purchases a home or estate usually under market value from auctions with the intention to renovate, repair and resell the property at a profit. Ofcourse, flipping for private leisure is also a great addition to a personal portfolio and remains a stable asset.

Flipping a house into a luxury home

It is important to understand that when looking for a ‘flip’ investors should keep a budget in mind and be mindful of market values. In general, it is advised to look for a property in which you can make a profit of at least 20% and smart investors generally won’t pay anything above market value. Repairs and renovations can also add up; however, there are many financing options to take advantage of. For instance, Ploutos offers Auction and Refurbishment loans to get a property upto market value.

Before flipping a property, one should also consider the ‘ideal buyer’ and renovate the property with that in mind. If you follow trends, chances are more people will be interested in your estate. Old buildings are great house flipping opportunities as the home’s natural features complemented by modern designs are appealing to many.

Renovation needed house

Regardless, flipping a house into a luxury home can be great fun, and London is home to many exclusive and bold interior designers to personalise your property in ways most homes cannot, adding value to the home. You have the freedom to be creative and design a property according to your liking. However as said previously, it is important to implement the types of designs a potential buyer would be interested in. Once a project as such is completed, it can feel like a great accomplishment.

Investing in rental properties 

Luxury properties in central locations and rare features can generate a lot of passive income. As rental prices increase and the demand for housing increases, this business venture is a stable investment providing a high return on investment and a stable passive income.

Investing in lux property

However, it is important to have good tenants if you wish to enjoy a stress-free monthly income. Many investors opt to screen potential residents and hire property management companies to manage the property on the owners behalf.

People love the exclusivity, and escapism luxury properties offer. Therefore such properties can cater to short and long term residents. Listing your estate as a holiday apartment/home is also a great way to enjoy continuous income. However, it has the added responsibility of cleaning and property turn over.

Luxury real estate investment

Ploutos offers a number of buy-to-let financing opportunities, where up to 80% of the purchase price could be covered from the loan. However, instead of straight-forward market-value purchases, we advise to hunt for undervalued and poorer condition properties, where a short-term loan with refurbishment capital could be secured and then it could be refinanced to a more long-term solution.

Custom build

Unlike house flipping, building a custom made house provides limitless creativity unbound by buyer trends (if the property is solely for the buyer). Ploutos could assist clients wanting a custom build to finance acquisition and the building process.  Custom build houses offer high-profit margins as such homes are built in modern styles and high tech amenities. The label of ‘new’ also drives up prices making it an attractive listing.

House with swimming pool

Custom builds are also said to have the highest profit margins. People now look to move away from crowded cities to suburban areas, so the opportunities for custom builds are somewhat limitless. Luxury clients want privacy, security and peace, which is why investing in a suburban area is highly sought after.

Suppose the house is being prepared for potential buyers, In that case, it is important to find a balance between a broad appeal and some level of uniqueness to appeal to luxury clients. A custom-built home needs to be energy efficient, well located, high tech, and functional to make it appealing to high income individuals and thus, earning a high profit.

A custom-built home

The downside to custom builds is time. These projects often take long periods to complete. Although the ‘new’ appeal and uniqueness is something luxury buyers crave and drives up value.

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