There are two basic reasons to invest in luxury real estate: to live the lifestyle afforded by your wealth, or to tap into the potential for fantastic long-term profits. While investing in luxury real estate isn’t just for high-net-worth buyers, you must understand what is entailed if you want to move up the property ladder into this market. Florida is an especially healthy market to look into.
Among the buyers today are either young entrepreneurs who have joined the ranks of the world’s richest or older people seeking retirement homes. Those who can cover the price of an upscale home would do well to get in on the action.
What makes investing in luxury real estate a good idea?
General benefits
Owning a luxury home is different from investing in regular real estate. Upper-income-bracket buyers have different demands than do regular home buyers. For this reason, anyone who wants to enter the luxury market as an investor needs to be attuned to their needs.
Another thing to bear in mind is that real estate trends for luxury homes in Florida can change rather quickly. Knowing which trends are likely to earn you top dollar will allow you to maximize the gains from your investment. Besides knowing your way around, you must have clear goals in mind before you decide to enter the market.
Tax benefits
Florida is one of the most tax-friendly states. Many potential buyers see the benefit of relocating to take advantage of the state’s lower tax rates. Besides having no income tax, it has a homestead exemption. This means a tax break on the first $50,000 of the assessed value of your home. Tax incentives are one of the things that makes luxury homes for sale in Florida aviable investment opportunity.
Luxury homes in Florida like those found in the highly-rated golf community The Club at Ibis, are highly sought-after because they aren’t located in flood zones. This makes them less vulnerable to hurricanes – a fact that increases their value even further. Consider your tax implications with advice from a professional real estate team and accountant.
Resistance to inflation
Many forms of investments are affected by inflation. Inflation effectively reduces the value of your holdings. Stocks and similar assets can decrease in value. The good news is real estate, particularly luxury real estate, tends to be resistant to inflation. In fact, values go up alongside inflation. This makes luxury real estate investments more reliable in the long-term than other forms of investment.
Harnessing the power of leverage
Many luxury homes in West Palm Beach present a fantastic investment opportunity. Luxury real estate is one of the easiest assets to leverage. Leveraging real estate allows funds to go further.
The initial up-front deposit for a luxury home can be far lower than the value of the property. Down payments are typically 20% or less, with amortization terms of over 30 years. Not only is this form of investment highly accessible, but financing is also incredible. With the power of leverage, you gain the flexibility to invest in multiple luxury real estate properties rather than just one.
Building wealth
In terms of long-term investments, luxury real estate presents a fantastic opportunity to build wealth that can be transferred to future generations. A luxury real estate investment tends to be more reliable in the long-term as opposed to the stock market, which can be highly volatile. Buying and holding luxury real estate is a stable way to build a consistent source of income. The individual also gets to own a tangible asset that can steadily increase in value.
Forced equity
The smart investor knows to be proactive about increasing the value of their property. Buyers of luxury properties expect high-end amenities to come with their home. The key to creating forced equity is to invest in a property that doesn’t yet have all the bells and whistles buyers are seeking. The most desired features can then be added to create the most value.
This can be as simple as building an extra bedroom or two in the home. You can update bathrooms, making them larger and more luxurious. Better yet, add smart home features that are big on convenience.
With a little work, forced equity can have a considerable impact on your bottom line.
The best luxury real estate at The Club at Ibis
While luxury real estate investment has many benefits, it is essential to work with an experienced realtor. Find someone who is familiar with the local market and has specific experience with luxury real estate.
No one knows the local luxury real estate market better than Eric Telchin and The Telchin Group. If you are looking to invest in some West Palm Beach luxury real estate, such as property at the world-renowned golf community The Club at Ibis, work only with the best professionals. Call us at 561.301.0249 or email Eric(at)TheTelchinGroup(dotted)com.