If you’re interested in accumulating wealth, securing your financial future, or just diversifying your investment portfolio, you might consider buying and managing luxury real estate. The potential returns are incredible, there are many ways to get involved, and under the right conditions, it can be a truly passive investment.
The question is, how do you get started in managing luxury real estate if you have no capital or no experience?
The Potential Returns of Luxury Real Estate
The potential returns of luxury real estate are impressive. In nearly all forms of real estate investing, you can capitalize on multiple forms of returns. For starters, you can benefit from property appreciation. Over time, the property should increase in value, allowing you to increase the size of your portfolio and the value of your investments individually. Assuming you can keep those properties rented, you can also generate revenue in the form of rent on an ongoing basis. You may even be able to use your luxury properties for other forms of income generation, depending on their nature and demand in the area.
You will have some expenses, of course, including repairs and maintenance, occasional renovations, taxes, insurance, and other less predictable costs. However, the passive income you generate with these properties should more than makeup for these expenses. This isn’t a guarantee, of course, but as long as you do your due diligence and manage the property appropriately, you should be able to have net positive passive income.
This potential only increases as the size of your portfolio expands. The proceeds from initial property investments allow you to invest in more properties, snowballing your income and ultimately your wealth.
Why It’s Hard to Get Started
That said, there’s a reason why most people don’t invest in luxury real estate; it’s hard to do. And it’s especially hard to get started.
One of the biggest barriers to getting started in luxury real estate is raising capital. If you want to start with real estate investing, you might be able to find a relatively cheap property in your area and make a minimum down payment that’s reasonable to save. But if you’re looking almost exclusively at luxury properties, the initial costs are going to be monumental. Some of these properties cost millions of dollars, so even if you’re taking out a loan, you’ll still need a massive amount of capital to get started.
It’s also very hard to get started in luxury real estate if you don’t know what you’re doing. Where should you start looking for properties? Which types of properties are the best to buy? How do you plan for and manage expenses? How do you find the right tenants? The questions go on and on.
Another barrier is in the form of connections. Successfully managing a luxury property, or several, requires you to have access to property managers, maintenance people, marketers, and other experts who can help you in your pursuits.
Thankfully, there are strategies that can mitigate these obstacles.
How to Get Started Managing Luxury Real Estate
These are some of the best strategies for getting started with managing luxury real estate.
- Learn the fundamentals: Before you do anything else, take the time to learn the fundamentals. There’s a lot to learn about real estate investing and real estate management, and there’s even more to learn in the luxury space. You don’t need to become an expert, but you should be at least familiar with the foundational principles of this style of investing.
- Build up your network: After that, consider building up your network. Start meeting people who are interested in real estate, and connect with their connections as well. The more people you know in the business, the better; these people can teach you, guide you, lead you to opportunities, and help you in managing your real estate as well.
- Find a mentor: There are many ways you can find a mentor. The easiest way is to simply keep an eye out for a mentor while you’re networking. A mentor can help you in a number of ways; just make sure you’re mindful of their time and appreciative of what they give you.
- Start saving capital: Real estate investing is tough without the requisite capital. Accordingly, you should start saving up your money as soon as possible. Aim to accumulate enough for a down payment on your first property.
- Consider starting with less expensive properties: Your end goal may be investing in luxury properties, but it may be worth considering a cheaper property at the beginning. It will help you build a passive revenue stream sooner, fueling your future ambitions, and it’s a great way to get experience along the way.
- Find a great property management partner: With a great property management partner, your income becomes truly passive, and you’ll have far fewer problems to sort out for yourself.
- Buy your first luxury property: With all these strategies under your belt, you should be ready to buy your first luxury property and start managing it.
Managing luxury real estate isn’t a path for everyone. But if you’re interested in significant returns, if you want more exposure to the real estate market, or if you just genuinely like the idea of managing properties, there are accessible ways to get started.
