When investing in luxury real estate, location is key. For example, Studio City, Encino, and Bel Air real estate offer desirable locations and ample opportunities for potential investors and homeowners alike. Each city has its own unique, appealing features worth exploring before making a decision about where it is that you would like to invest your time and money.
However, once you have narrowed down a location for your investment property, many of the same factors will inform your next steps regardless of the location. This guide will cover what you need to know about investing in the luxury real estate scene, including deciding on a location, addressing financing, and navigating the buying process.
Choosing the right location
Many factors — from personal to financial — will impact what the right location will be for your investment. If this is your first investment property, concerns such as proximity to your own work or home may be important to you. As you develop an investment portfolio and perhaps even hire a property management firm to handle the day-to-day matters related to each property, you may want to expand the area you are looking at based on where you will get the highest return on investment (ROI).
Studio City real estate
3500 Wrightwood Drive sold by Iconic Homes LA
Located in the San Fernando Valley region of Los Angeles, Studio City is known for being home to a unique mix of residents, including actors, entertainers, music industry professionals, and business executives. The area boasts tree-lined streets and luxury homes that range from cozy cottages to sprawling estates.
Encino real estate
16280 Dorilee Lane sold by Iconic Homes LA
Encino is another attractive neighborhood located on the west end of the San Fernando Valley near Studio City. Over the years, Encino has become an incredibly sought-after neighborhood due to its proximity to major freeways, excellent shopping options, top-rated public schools, vibrant nightlife scene, and upscale living options.
Bel Air real estate
2415 Carman Crest Drive sold by Iconic Homes LA
As an affluent residential area located at the east base of the Santa Monica Mountains, Bel Air is known for some of the most expensive real estate in Los Angeles. Properties here range from grand 19th-century estates to modern mansions situated along winding hillsides or overlooking lush canyon landscapes.
Know your market
Before investing in any form of real estate, it’s essential to understand the current market conditions and how they might impact your ROI. Generally, markets are influenced by factors such as employment rates, consumer spending trends, population shifts, and local economic forces. When considering luxury investment properties, those local economic forces may be the most important to consider.
Additionally, comparing the price per square footage across several nearby neighborhoods can provide valuable insight when trying to identify properties that may be currently undervalued. As you start to get into data-driven analysis related to property values and predicting future demand, you need a professional real estate agent to work with.
A qualified agent who is knowledgeable about your desired market will have access to tools and data you do not. In addition, an agent who specializes in helping those looking for luxury properties as investments will be better equipped than one who has no previous experience with handling investment properties.
Line up your financing
Regardless of what your own financial situation may be, you are most likely going to be considering some kind of financing when purchasing a property as an investment. Financing enables an investor to greatly increase their potential yield by accessing additional capital. Given the more considerable sums involved with investing in luxury properties compared to other forms of real estate, financing plays a particularly significant role in such purchases.
As such, it is essential to carefully research the lending options available to you. Some of your options will include traditional bank loans (fixed- and adjustable-rate mortgages), private financing (hard money lenders and pension fund portfolios), as well as non-traditional methods (money loaned by family or friends). Ultimately, having access to all these alternatives gives you more control over how much you want to finance.
Making an offer
Photo courtesy of Pexels
Do you have your property picked out and have your financing in line? Now, on to the easy part, right? Unfortunately, you still have a lot of work ahead of you in developing, pitching, and negotiating an offer to the current owner. This is another point when you will be grateful to have an experienced real estate agent on your team. Your agent is going to be your best resource for devising an offer that makes sense for you and is likely to be accepted by the seller.
An offer is about more than just the sale price. Contingencies and concessions can play a significant role as well. Common contingencies cover items such as a home inspection and the buyer's ability to obtain appropriate insurance. Concessions can range from the seller providing items like furniture and appliances to closing costs and timelines. Buyers should be aware of any potential concessions before making an offer, as it’s important to ensure that these are taken into account in their assessment of the property’s value.
It is also important to consider a closing timeline that works for both the buyer and seller. A typical closing involves signing final documents, transferring any funds to close, and having title insurance in place to guarantee that ownership is passed from the seller to the buyer without any encumbrances or legal problems. Throughout the entire process, it is important to ensure that all steps are taken in compliance with relevant laws, regulations, and local ordinances. Having a professional who knows about all the potential legal tripping points of closing can save you a lot of headaches and setbacks.
Finding an agent for your investment search
Whether you have purchased an investment property in the past or are just getting started, you need a professional real estate agent on your side. Team up with Mark Rutstein of Iconic Homes for top-notch guidance you can trust. The experience, knowledge, and tools that a qualified agent brings to the process will not only make your role easier but will also help you to make the best investment of both your time and money. Get started today.
*Header photo 2700 Edwin Place sold by Iconic Homes LA