BEST BEACH REAL ESTATE INVESTMENTS
WHAT MAKE BEACH REAL ESTATE ATTRACTIVE TO WEALTHY INVESTORS?
Among the prime locations in the real estate market, beach houses often have high-sky prices that most only the rich can afford, thereby increasing their attractiveness and value for buildings in this area.
According to second-quarter data from real estate services firm Knight Frank, the insurance fee rate for riverfront real estate is 40%, harbor real estate is 62% and beach real estate is 63%.
Among the major Real Estate markets in the world, four Australian cities are at the top of the Knight Frank International Waterfront Index, an index that measures the value of real estates at coastal area including Sydney (121%), Auckland (76%), Gold Coast (71%) and Perth (69%).
Some other markets also recorded a relatively high index as Monaco with a 43% insurance fee rate, Phuket (Thailand) is at 41% and Dubai (United Arab Emirates) is at 40%.
According to experts, riverside or waterfront houses have huge potential and are one of the most attractive real estate segments for wealthy buyers. There is a significantly increased interest in major riverside urban cities.
Beachfront houses are still a popular investment for many people around the world. In fact, searches for waterfront properties on sothebysrealty.com have increased 63% year over year.
Today's luxury home buyers are not only concerned with where the property is located, but also where the property fits into their lifestyle. Beachfront real estates offer the best choices that a buyer could ask for: Beautiful views and plenty of family-friendly activities.
There are many reasons why beach real estate is always expensive, one of which is limited supply. Furthermore, people like natural space, comfort and privacy here. Of course, worrying about sea levels is always exist.
9 TIPS THAT WILL HELP YOU BUY PROFITABLE BEACH RESORT VILLAS
Although beach resort villas are expensive, they are always sought-after by the elite Investors.
Thanks to surrounding by nature landscape and unique architecture, beach resort villas is shown as an effective real estate investment channel for many years.
However, behind the desirable profit figures that many investors achieve, there are also many potential risks that inexperienced investors are easy to get. So How to get accurate and multi-dimensional assessments and analysis between the information matrix that is flooding the internet? What should investors pay attention to to avoid losing money and achieve the highest profit?
Which area should investors pour money in? Should get a bank loan or not...? Let's find the answers at below.
1- Shouldn’t use Financial Leverage that is too large compared to Core Capital
Investors should only invest in beach resort villas when having a minimum capital amount in hand. Although project owners often offer many extremely attractive loan policies that could be up to 70%-80% of the beach resort villa value, but it is best to only borrow up to 50%.
Because usually, the liquidity of this expensive beach resort villa real estate is not as high and fast as other real estate types such as land plots, apartments, etc., so the risk for Investors is great if the cash flow cannot be reversed. Moreover, it should also take into account the case of high bank interest rates or exploitation profits are not as expected.
2- Consider Tourism exploitation feasibility
Beach resort villas are commercial real estate, so the feasibility of tourism must be carefully considered.
Even if you buy beach resort villas to enjoy, most of them are handed over to the project owners for business operation during the owner's non-use period. Therefore, it is necessary to understand thoroughly about the tourism potential of the area so that this is really an effective investment channel that brings a passive income source.
3- Understand well about Project owner & Project exploitation company
Capacity of project owner and exploitation management company is equally important.
The project owner is important because it decides whether the project is conceived as a perspective or not, whether the buyer’ cash flow is safe or not. The operation management unit decides on user experience and the project's ability to attract customers.
4- Most of Beach Resort Villas are sold at future prices
Usually in the first 3-4 years when buying a beach resort villa, the profit margin from the ability to exploit rooms will often not be as expected. And for some projects where the project owner is committed to paying profits, the ability to exploit the rooms is low plus the expensive costs for brand PR & attracting tourists, so it is difficult for project owner to achieve high profit to pay investors. Therefore, selling price of beach resort villa might be included a part of the difference to ensure that paid profit is not broken.
5- Understand clearly about Agreement terms
Understanding thoroughly agreement terms, costs that the buyer has to bear, and reliability of independent auditor
Not only coastal resort villa but any real estate types, buyers should also pay attention to these factors. Transparency and feasibility of agreement need to be clarified to avoid later risks.
6- Exploit Beach Resort Villas characteristics
Investment characteristics of beach resort villas are different from land plots and apartments.
Beach resort villas are a luxury real estate type, few people could own, so the liquidity cannot be as high as land plots, apartments, etc. Furthermore, the value of this type of real estate is at scary characteristics, so once the beach resort villa area has been put into stable operation and well exploited, it will definitely help the selling price and rental price increase very high. According to our research, beach resort villas usually grow profit well after 4-6 years.
7- Avoid the Low Price Trap
Beware of surprisingly cheap projects in the same area.
Beach resort villas are more outstanding than other real estate segments thanks to their ideal location and many factors of utility, operation, brand, etc., so cheap beach resort villas often have many potential risks. Many projects cut costs to sell cheaply to customers and then let customers manage and use them themselves, not to support liquidity or operation.
8- Define feasible Capital Recovery time
If buying for investing, it is necessary to clearly define the feasible capital recovery period.
Normally, from 8-13 years, investors will recover their capital. Investing in the resort segment, the profit per quarter/year is not much, but the long-term income, and the added value is also extremely high if the project is well exploited.
Furthermore, customers should also find out carefully how many years the beach resort villa is owned because it is usually only owned for 50 - 70 years. It is rare for projects located close to the sea to be owned for a long time.
Moreover, weather and epidemics are force majeure factors that will greatly affect the rate of room exploitation and the owner's vacation time.
Beach resort villas in the Central region often encounter many natural disasters, so it should be noted. To be more sure, before buying, you should refer to the efficiency rates of nearby projects or brands in the same segment for an objective assessment.
9- Investment Timing
It is advisable to invest at the time when the project owner has just opened for sale and choose a reputable agent.
The first batch of sales will normally have the lowest price, and gradually increased over the next period. So you should find and buy early to get a good price and a wide selection. However, it is also necessary to choose a reputable project owner to ensure that the project is implemented as originally introduced.
Each project owner has different strengths and weaknesses. Therefore, it is necessary to evaluate the project owner capacity through the following factors:
- Financial capacity, revenue, profit, experience in developing old projects, scale of implemented projects,..
- How quality of the projects that the project owner has done? How does the level of customer satisfaction? Are there foreign shareholders?