When the COVID-19 pandemic rattled the world early this year, many people were affected. Due to imposed lockdowns and massive lay-offs, economies took a hit and businesses suffered. Surprisingly, in the United States, there is one sector that has managed to evade this slump—the high-end rental property market.
In April this year, seven major real estate investment trusts in the US reported a collection rate of 94 percent among high-end apartment rentals. While millions of Americans were down in the dumps, the rich remained a stable market. Amid the crisis, apartments catering to families earning up to $100,000 a year remained occupied, with most of their tenants having job and financial security.
This incident shows why luxury real estate could actually be a viable investment for those who could afford it. While the initial capital for high-end homes might be larger than lower end ones, the more expensive homes cater to a more stable clientele. Even in the middle of a pandemic, premium projects continued to be in-demand among the wealthy. Here are more real-life examples that demonstrate why purchasing high-end real estate property may prove to be a great investment move.
Despite its expensive property prices, Miami continues to be an investor’s haven due to a high rental market.
Magical homes of Miami
Known for its tropical weather and white sand beaches, Miami in South Florida is a popular tourist destination. The area is attractive to investors looking to lease out properties because 71 percent of Miami’s residents are renters. According to online data analytics platform Mashvisor.com, the real estate market in Miami has appreciated 177 percent since the year 2000, which is significantly higher than the US average.
Homes in the so-called “Capital of Latin America” of the US do not come cheap. Mashvisor.com reports that the median property value in the area exceeds the national level by 235 percent in 2019. The high prices may deter some investors, but seasoned homebuyers continue to flock in the area because the properties are significantly less expensive than those found in New York, Los Angeles, and San Diego.
Miami recently felt some slowdown in sales for the past months, but this only made the place more lucrative for investors as prices are expected to become more affordable. The high-end homes of Miami have, more often than not, given investors substantial profit due to the area’s tourist spots and high renter population.
Los Angeles commands high prices for its historical mansions as many of these were homes of Hollywood stars.
Historical gems of Los Angeles
Home to Hollywood, Los Angeles is another American city that enjoys a thriving real estate sector. While the city features a lot of modern condominiums and townhouses, it’s the single-family houses and mansions that are proving to be the best property types to invest in. In particular, historic residences are raking in astounding profits even in the pandemic era.
To exemplify, a nine-acre Beverly Hills estate built in the 1930s reportedly sold for $165 million early this year. Considering that the estate was originally bought by its last owners for $47.5 million about 30 years ago, the property’s recent sale marks a 247 percent return on the original price.
While the luxurious features of historic homes draw in many investors, it’s actually the stories behind the houses’ previous occupants that make them valuable. The homes of Hollywood stars, film producers, and other historical figures offer wealthy homebuyers a chance to experience their lives through their homes. In addition, rich architectural details make many of these homes eligible for historic preservation. Overall, classic mansions continue to be sought-after by investors hoping to make a lot of money flipping houses or renting it out to wealthy tenants.
Luxury condominiums in Toronto, Canada’s largest city, draw numerous buyers.
Classy condominiums of Toronto
Toronto, the largest city in Canada, is home to numerous high-end condominiums. The city has seen a rapid increase in real estate prices in recent years, making it a hotbed for investors. According to Royal LePage, a local real estate company, the median price of a luxury condominium in the Greater Toronto Area rose 7 percent last year. This proved to be a profitable investment for the buyers of Toronto’s earliest condominiums made up of many young professionals, couples and families who didn’t expect the financial windfall.
Toronto currently experiences a high demand for condominiums because of the lifestyle these high rise homes offer. Smack in the middle of the bustling city, many of these luxury condominiums offer low maintenance and high security residences to the young elite. Foreign buyers are also attracted to the market because these units are easy to rent out to white-collared workers.
Due to a sustained demand for high end homes, condominium sales remain high in Toronto. Many people turn their property purchases into rentable spaces as Toronto continues to cater to a robust luxury home market.
Luxury homes are reliable investments even in the worst of times.
Payback of property investments
While the expensive capital may deter many of us from buying luxury homes, high end properties have proven to be a good investment in the long run. More often than not, these residences offer hotel-like amenities and services to a special few. More importantly, these projects have proven to be profitable investments in the long run, even earning more than twice its original selling price if sold at the right time.
If you’re looking to reap benefits from real estate over a lengthy period, a luxury home is the way to go. If you choose to live in it, you and your family get to enjoy world-class amenities, topnotch security and classy neighbors. If you plan to rent it out, wealthy tenants often prove to be dependable clients even in the worst of times. Whether you buy a luxury home for your personal use or financial gain, it’s a win-win situation for both. High-end projects pay off in the long run. If you can afford them, consider investing in one because there is much profit to be made in this exclusive side of the real estate market.
Sources: www.mansionglobal.com; www.mashvisor.com; Scott Webb, Roberto Nickson, Daniel Semenov, Antonio Cuellar via pexels.com