Like most of us, you might be considering buying an investment property but not sure of how to begin. So many options! But how do you know which is good for you? What’s important is at the end of the day, you’ll want to ensure you invest in an asset that provides a regular financial return and is likely to appreciate in value. The question is then, how do you go about achieving that?
Don’t believe in “buy cheap and sell high” because this is not a logical way of how the property market works and in many situations, buying cheap isn’t always the smart decision. Here’s how investing in luxury properties can be a more profitable investment.
Photo: Imperial Square Unit
1. Lower vacancy rate
Luxury apartments, due to their nature, are in higher demand than properties of poorer quality and investment in luxury can go a long way to ensuring your property has a long tenant waiting list.
Finding tenants can be hard enough. Why make it harder for yourself by investing in a property people don’t want to live in?
In the case of some property investments, finding tenants to fill the property can be the bane of a landlord’s property management. Of course, if you buy with a developer, some will offer you an initial assured rental yield to ensure your investment delivers return while a tenant is found.
Positive Income Properties has arranged rental guarantees for up to 3 years with our property management companies.
2. Higher rental prices
With a higher demand for your property comes a higher rental price. It’s common sense, the more people who want to rent your property, the more you can charge them for living in it.
Demand and rental price are only increasing as well. More and more young professionals feel priced out of buying their own home, and don’t want to settle for a substandard rental property. That means they’re willing to send to have a home they can be proud of.
Asking a high rental price goes hand in hand with investing in a high demand property. The combination attracts high-quality tenants who care about where they live and are reliable. That means you run less risk of coming across a nightmare tenant.
3. Less maintenance
One worry that some investors can face when getting involved with property for the first time is the thought of property maintenance. You don’t want to purchase a property that demands renovation and constant repairing.
Luxury can help reduce this risk, as well-kept properties typically have fewer issues. Of course, this can depend on your definition of luxury.
How we see it is that - with a luxury apartment, your property is ready to house tenants immediately and requires minimal maintenance in the future. Not only does this provide you with a hassle-free investment, but it means you’re more likely to save money on maintenance costs and less likely to lose out on rental income due to a fault with the property.
4. Professionals Are Renting More
You might have an idea of the type of person who lives in a rental property. Who do you think they are? Students? Low-income families? This kind of thinking could lead you to make an investment in a basic property, appropriate for the rental figures that this type of tenant is looking to pay. This simply isn’t the case any more.
The rise in property prices in recent years means it’s getting harder and harder for young people to get on the property ladder.
This means that there’s a growing demographic of young professionals with a high income but are yet to make it onto the property ladder. Think about that for a second: an entire generation of people looking for a more flexible living situation who aren’t willing to compromise on quality.
Luxury apartments no longer only service the minority. An entire market is opening up for them.
5. Booming and major areas offer luxury for less
OK great, a luxury property offers investors an in-demand asset that commands higher financial returns and requires less maintenance, but is it true that investing in this type of property costs a lot?
That all depends on where you choose to put your money. A luxury apartment in Gold Coast, for example with an area forecast to become the next property hotspot, your luxury property needn’t put such a sizable dent in your bank balance.
High-potential areas offer a more affordable luxury property that, over time, can appreciate in value to become a premium asset for investors. If you get ahead of the curve, you can find a luxury property within your budget that offers all the benefits listed above.