For the most part, when people think about owning rental properties, their mind goes to lower or middle-class single-family properties. Small multi-family properties like duplexes and triplexes might also come to mind.
But there’s another class of rental properties at the other end of the spectrum that can produce pretty sweet returns if properly managed.
We’re talking about luxury rental properties.
What Are Luxury Rental Properties?
The term “luxury” is highly subjective, but is usually used to refer to properties that are on the upper end of the local market and include additional features, amenities, designs, and services that the majority of other properties in the area do not.
Luxury properties are characterized by prime locations, superior design, exclusive amenities, personalized services, and cutting-edge technology (including smart home features and high-end appliances).
The luxury rental market has seen substantial growth in recent years, fueled by shifting consumer preferences and an increasing desire for high-quality living experiences. As global wealth continues to rise, so does the demand for luxury accommodations.
Property managers, real estate investors, and homeowners are recognizing the potential benefits and returns in this sector, making it an attractive investment opportunity.
How to Get the Most Out of a Luxury Rental Property
Most people don’t just stumble into luxury rental properties. Owning a luxury rental is usually the result of one of two things. The first category includes people who formerly owned the home as their primary residence and now choose to rent it out. The second category involves people who seek out luxury rentals as a niche investment strategy.
While discussing strategies for managing a luxury rental property, it’s worth exploring the advantages outlined in using a property management company.
Regardless of which category you fall into, here are several management tips to help you get the most out of your properties:
Know Your Market
In the business world, many companies fail because they don’t put their focus in the right place. They build a business based on what they want it to look like, rather than starting with the customer’s needs, wants, and preferences.
The same is true with luxury rentals. If you make assumptions, you end up with a product (i.e. listing) that doesn’t appeal to your target market. Instead, you should start with your target renters in mind and craft properties and listings that appeal to their needs.
The most common luxury property tenants are:
- High-Net-Worth Individuals: Seeking privacy and personalized services
- Corporate Executives: Often requiring short-term leases with full services
- Celebrities and Public Figures: Desiring secluded properties with top-notch security
- International Travelers: Looking for unique, high-quality vacation rentals
- Empty Nesters: Seeking downsized luxury living with community features
While you can appeal to all of these, you might focus on just a couple. For example, you could tailor everything about your properties to corporate executives looking for short-term leases. This might involve having the property fully furnished and stocked with amenities they might need on a three-to-six-month stay.
Focus on the ‘Splash Elements’
Certain elements matter more in a luxury rental property than others. Pay particularly close attention to things like location, kitchen design, outdoor living, master bedroom and master bathroom, parking, and storage.
Hire a Luxury Property Management Company
There are property management companies, and then there are luxury property management companies. It might simply sound like a matter of semantics, but the differences cut far deeper.
Luxury property management companies are well-versed in this end of the market. They’re not just glorified rent collectors and repair coordinators – which is often what happens on the lower end of the market. They’re looking for ways to add value to your property, enhance cash flow, and provide an incredibly positive experience for your tenants.
Hiring a specialized company like Crown Luxury Property Management to manage your luxury rental property can offer several advantages that make the investment worthwhile.
For starters, they typically have rigorous tenant screening processes in place. This can help ensure that high-quality tenants with a strong rental history and good financial standing are selected, reducing the risk of property damage and rent payment issues.
Then there’s the marketing expertise they offer. Luxury property managers have experience in marketing properties like yours and can use their expertise to target the right audience with the right message.
Network, Network, Network
If you own a $200,000 bungalow in a suburb, you probably aren’t going to spend a lot of time networking to find tenants. You can just post a listing and wait for the applications to roll in. But if you have a $5 million home in an area where the median home value is $750,000, it’s going to take a little more effort to find the right tenant. This is where the power of networking comes into play.
Unlike other rental niches, luxury real estate is very much a “who you know” section of the market. You need to spend time shaking hands, meeting the right people, and showcasing your properties so that people know they exist.
The goal is to have your property come to mind when a high-net-worth individual tells their friends that they’re in the market for a short-term rental. The more you network with folks, the more likely it is that they know someone who knows about your property. This allows you to put a magnetic marketing strategy in place that draws prospective renters to you (rather than you having to go out and find them – which can get expensive).
When delving into effective luxury rental property management, considering the insights shared on making real estate investments work for you can provide valuable perspectives.
Set Yourself Up for Success
As you look for ways to improve your profit margin and find success with luxury rental property management, remember to never settle. The most successful people in this game are the ones who are committed to constant and never-ending improvement.
When you embrace this concept, a whole new world of opportunity opens up to you!
While mastering the art of luxury rental property management, incorporating the expert advice shared in top real estate investment tips can offer invaluable guidance.
You aren’t going to become a huge success story the first time you rent out your property. It takes time to build your mini real estate empire. But here’s the reality: It starts today. The way you treat people and manage your property will be significant determining factors in your overall long-term success. With that in mind, good luck!