Like many people, you might be considering a buy to let property investment but be unsure of how to begin. There are so many options available to you, so how do you know what the right decision is for you?
One thing is clear, 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?
You might hear some people say “buy cheap and sell high” but this is an overly simplistic view of how the property market works and in many situations, buying cheap isn’t the smart decision. In this article, we’re going to explain how investing in luxury properties can be a more profitable investment.
1. You’re More Likely to Find Tenants
One of the most important aspects of a successful buy to let property investment is the likeliness of finding tenants to provide you with regular monthly rental returns.
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.
That said, why wouldn’t you want to give yourself the best possible chance of finding tenants quickly? Luxury apartments, due to their nature, are in higher demand than properties of a poorer quality and an investment in luxury can go a long way to ensuring your property has a long tenant waiting list.
We can tell you that finding tenants is no easy task without the right expertise and experience and can induce many sleepless nights for landlords. That’s why we offer a 360 property management service to our investors, so we can have the headache of finding and placing tenants off your shoulders.
But we make it easy for ourselves. Every property we develop is done so with quality in mind all the way from the foundations to the fixtures and fittings. This is how we ensure the demand for them is as high as possible.
Finding tenants can be hard enough. Why make it harder for yourself by investing in a property people don’t want to live in?
2. Luxury Properties Command Higher Rental Prices
With a higher demand for your property comes a wealth of benefits, not least, the ability to command 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.
In fact, homeowner pride is one of the reasons we do what we do. We redevelop existing buildings with character into luxury properties we would want to live in. When we do this, we see demand rise and that’s why our properties target a higher rental price.
Commanding 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.
As well as this, when you invest in a property in which your tenants feel more comfortable living, they are more likely to renew their contracts and you can avoid any periods where the building is empty.
3. Luxury Means Less Maintenance
One worry that some investors can face when getting involved with property for the first time is the thought of property maintenance. What happens if you buy a property, only to find that it needs thousands of pounds of repairs?
Luxury can help reduce this risk, as well-kept properties typically have fewer skeletons in their closet. Of course, this can depend on your definition of luxury, so let us give you ours.
At The Heaton Group, luxury means using high-quality materials and the latest home technology (along with the best construction teams) to deliver an investment that is built to last.
That means maintenance costs shouldn’t be an issue when you invest with The Heaton Group.
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
We’ve already touched on the subject of more professionals entering the rental market, but it’s so important, it’s worth taking a moment to explore it in more detail.
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. Labelled ‘Generation Rent’, the rate of home ownership among Brits aged 20-29 has declined from around 50% to 20% since 1993.
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. Upcoming 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 investing in this type of property costs an arm and a leg… doesn’t it?
That all depends on where you choose to put your money. A luxury apartment in Mayfair, for example, doesn’t bear thinking about but, if you find an area that’s forecast to become the next property hotspot, your luxury property needn’t put a 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.
Of course, if it was easy to spot these hotspots, everyone would be doing so. So, how do you find the right area to invest in? Well, the best thing you can do is speak to a local expert, but we’ve made it even easier by listing the most upcoming postcodes in the North West. Just give the blog below a read.
6. Apartments Are More Affordable Than Houses
You might be wondering why we picked apartments to discuss, specifically, when talking about luxury properties. Surely, the same applies to luxury houses?
Well, yes, a luxury house comes with the benefits of all the above points. We would, however, draw your attention to the fact that apartments typically come with a lower entry price than houses, meaning you’re more able to put your money on the quality of the property than its size.
This is important when you consider our previous point that more young professionals are entering the rental market. This demographic typically don’t have families, and therefore houses are not in high demand.
Therefore, investing in an apartment doesn’t just come at a low price point, it can actually be more attractive to tenants.
In the end, luxury apartments aren’t popular among investors just because they look nice. For all the reasons outlined, investing in luxury can improve your investor experience and return on investment.
We’ll leave you with one final thought: luxury doesn’t have to mean expensive. Contemporary luxury isn’t about marble bathrooms or gold plated taps, it’s about delivering a high-quality living environment. Find the right property (or property developer) and you can invest in luxury without breaking the bank.
If you want to learn more about how to make a success of your property investment, have a read of our free eBook, How to Invest in Property the Easy Way: Strategies for Success and What to Avoid.