Keep This In Mind When Renting Out Your Luxury Property
Buying or investing in a luxury home depends on whether you are looking at that property for end-use or to earn from it by renting it out. While self-use means you will be using all the expensive propositions it comes with by yourself, leasing it out means that its cost might or might not get recovered through monthly rentals. So is it wise to invest in a luxury home and then rent it out? Here's a rundown:
Understanding the luxury aspect
There are specific elements that make a home expensive and luxurious. First is the location of the property that plays a key role in deciding the value of the property, followed by the amenities, interiors and space management indoors, and frontal view. So, understand the elements that make the property you are planning to invest in, a luxurious asset. For instance, if it is furnishing and interiors, you can add up the value in the monthly rental, but, its maintenance would be a big task. Similarly, you can charge an extra premium if the home is close to a marketplace or has a good neighbourhood.
Also read: Is Now A Good Time To Invest In Luxury?
Pros and cons of renting
Leasing out your luxurious home can give you the advantage of recovering the cost through monthly returns. However, if you have invested a huge amount in furnishing, the upkeep might be a concern. An expensive modular kitchen might suit your needs if you are planning to live here, but, can be completely avoided if you are leasing it to someone else. Similarly, wooden flooring, top-of-the-order furniture and even sanitaryware. All these amenities call for a completely different level of maintenance, which might not be easy for every tenant to keep up with. However, if it's the location or neighbourhood or the amenities that is making it expensive, then the premium charged can help you to pay off your EMIs (equated monthly instalments). In a way, if there is something intangible, which has made your home expensive, renting it out is always a good option as the market value invariably goes up if the amenities provided suit the need of the potential tenant.
Tips for leasing out your costly home
- Mention the maintenance clause in your rent agreement
- Avoid buying expensive furniture and other decorative for this property
- You can factor in the cost of furniture rent in the lease amount
- Consider taking a deposit amount as a security money
Rental returns for a luxury property might not be attractive if you do not factor in the cost of amenities, furniture, and interiors provided. However, overpricing the property would not be a healthy as this could keep potential tenants at bay. Hence, package your luxury property in a way that it suits you and your tenant's budget in the best possible way.