Four tips for investing in real estate from four world luxury leaders
American wealth is on the rise: The population of individuals with net worth over $ 5 million increased 17% between 2019 and 21, according to Coldwell Banker Global Luxury’s “A look at wealth“report. At the same time, wealth allocated to real estate has jumped to $ 3.6 trillion in 2021. With so many people turning to real estate to diversify their investment portfolios, how do you cash in?
Thousands of Coldwell Banker Global Luxury specialists around the world are trusted advisors to clients looking to increase their real estate portfolio. I recently contacted four of them to find out their secrets. Jill eber and Nathan Zeder are part of the famous Jills Zeder group in Miami, which far surpassed $ 1 billion in sales this year alone. Beverly Hills-based celebrity agent Joyce Rey caters to billionaires around the world, having launched the first U.S. company to specialize exclusively in multi-million dollar homes in 1979, and Ed Feijo serves the titans of biotechnology, medicine and universities in Cambridge, Massachusetts.
1. The basics: Know your investment goals
When he first enters the investment market, Zeder encourages starting small: “Real estate is expensive, so make sure it’s something you’re comfortable doing. “
Eber says, before you get into the game, “know your ultimate goal when choosing to invest.” Think about what kind of investment you want to make and prepare accordingly. Are you buying to return, rent or keep?
If your goal is to buy and rent, be prepared to manage the property. Zeder and Eber emphasize that being a homeowner is very different from turning over and selling; you need to be prepared to deal with issues like changes in the rental market, repairs, and breakdowns. The properties require maintenance, and if you’re not a handyman yourself, have a team of people on hand to help.
If you’re looking to rock, start small because the expenses add up quickly. You might not be as concerned with inspections if the place is to be demolished, but be aware of the potential costs.
If you plan to buy a second home to keep and sell later, be aware that these purchases require more due diligence upstream of the transaction and that an inspection is more vital. This is just one of the many areas where it is essential to have an agent as a trusted advisor during the transaction.
2. Location, location… Return on investment
Feijo suggests prioritizing location if you plan to invest in a rental property; make sure it’s still salable and located where tenants want to live.
Often, buying a property comes down to the return on your investment. “Never miss a good opportunity, because you will never regret a good buy,” advises Feijo.
Rey notes that the most sophisticated investors she has worked with are looking for prime locations and quality construction, which makes her market exceptionally strong.
Eber agrees that desirable locations, waterfront views, and the feel of a home are most important to buyers. Proximity to schools, if desired, and the ability to walk are also key factors. The investor looks at all of these, but the end result of the investment is most important, and the location will always affect the return on the investment.
3. Prepare for the luxury migration
This has been the year of the movement, so experts suggest being flexible when considering where to invest.
In California, Rey has seen a huge migration to the suburbs as people search for more land. Although she saw a move to other states, people kept their homes in California and added second homes in other states to their portfolios for tax reasons. As for where people come from, the market remains largely national, but Rey has started seeing global buyers again. On an annual basis, the luxury market is made up of 20 to 25% foreign money.
Like most cities in the United States, Cambridge has a tight inventory. It’s a big secondary city, outside of Boston, where people feel like they’re getting more for their money. Feijo notes that he has seen many young families settling in the area, with buyers mostly nationals. He sees occasional international buyers whose children attend nearby universities like Harvard or MIT.
Miami has always been a hotspot for investors for its multicultural and welcoming nature; unparalleled location; and international stature. Zeder says there has been a monumental increase in movements from other parts of the country, including California and the Northeast, perhaps the most they have seen. He believes that as travel restrictions are lifted there will be an influx of international buyers.
We are seeing a wave of those choosing to invest in real estate over the stock market, due to declining volatility and overall stability. In addition, Zeder’s international clients often invest in US real estate because they potentially see it as a “safe bet” in the short and long term.
4. Find a great partner
Navigating the nuances of real estate investing can be difficult, so finding the right real estate expert to walk you through the process is a must.
With our vast network of over 90,000 knowledgeable agents, it’s easy. “Pick a great broker at Coldwell Banker,” says Rey. “Get professional advice and guidance from a knowledgeable real estate agent you trust implicitly. “
If you are ready to start investing, visit https://www.coldwellbanker.com/about.
The persons named here are not licensed financial advisers. Seek advice from a licensed financial advisor when making personal finance decisions.
Michael Altneu is the Vice President of Luxury for Coldwell Banker Global Luxury.