What is the Most Profitable Investment in Real Estate?
- Al Sander
- Oct 14, 2022
- 10 min read
Updated: Dec 9, 2022
The answer to this question is very simple. We need to create the product looking more expensive than the asked price. It depends on many factors. In this article we will consider what is fundamental for profitable real estate investments, what components lead to high profitability for investors and how to achieve a level of profit beyond the standards in the industry. The article tells about the best projects to invest in and how to achieve 100% guarantee of investment security. After reading to the end, perhaps your mindset will change. Knowledge is a great power; knowledge is worth a lot of money. An out-of-the-box view of investment projects requires you to forget stereotypes and discover other opportunities.
Let's see what affects the profitability of the project and how to make it highly profitable and interesting for the investor. By answering these questions, we will understand which real estate investment are the most profitable.
CONTENT:
Golden Rule in Real Esate Business
The first golden rule is the uniqueness of the project. There is no point in wasting your time, and even less so the time of investors, on trivial projects. There are enough of them on the market. Who can surprise people with another construction of apartment complexes, where everything is clear and known beforehand, or another office center, covered parking lot or shopping mall? Of course, all these objects are necessary, but the competition in this industry is so high that there have already formed the behavioral stereotypes of how to build and what to build in order to stay in the market trend. The industry dictates its profit standards. But any of these ideas can be turned into a unique project, a concept that simply does not exist in the world, a novelty in a market where everything is not as everyone is used to seeing. Therefore, we need a transformation of aesthetics, a new look at the projects, not to do it the way others do, to do it in our own way, not better, not worse, but in our own way. And then the face of the project will appear, its individuality, and then we will get closer to the cherished goal: to create a unique project.
Transforming Aesthetics. Find a unique idea!
There are not many palaces, and there are not many flaming birds flying in flocks.
All this is true. But, still, there the question remains. But why do we have the deep awareness of what is happening around us as something threatening. The world has been swept by a wave of new fashion for so-called minimalism in design, both in interior design and in architecture. The overall stagnation and almost collapse of the entire system of the world economy with its endless striving to accelerate technological progress and improve living standards and consumption, the system of making money out of thin air (all the stock exchange instruments of profit from so-called investments) without the real economy sector, where all the wealth accumulated by mankind is created, it all lead to degradation and feralization.
People simply stop perceiving beauty, tastes are transformed to such an extent that we begin to easily accept other aesthetics. And the problem is not even that time is changing, but that time is changing humanity in the direction of regress, not progress. Hence the appearance of completely faceless houses, faceless cities, modern architecture in so-called "boxes" - a minimalistic style of cement houses with circular glazing, marketed as a trend in architecture, which changes the consumer's consciousness, imposing false values. They say this is fashionable and your house is trendy. And indeed, when choosing a new property, the consumer is faced with the fact that there is simply no other choice. And the question is only the number of square meters and the location. Even the interior decoration is not so important, it is standard and also faceless. But at the same time there is the question of what would be left behind, what would we pass on to the next generation. In examining this topic, I am first and foremost concerned with art, both in the interior and in architecture. It is art that remains for centuries.
The rest simply dissolves and fades into oblivion. Why do we have museums today, with great canvases of famous artists? Because, this is all art. It was brought to us by a class of aristocrats. It was they, with their ability to see beauty and education, they could isolate the special beauty and preserve it for posterity. If not their unique homes with works of art the world would never have known the great names of their creators. They passed it down from generation to generation.
How will these faceless boxes of homes worth millions of dollars be perceived today, 20 years from now, and 30 years from now. What will be left of it? Probably nothing. Such houses could not be an investment, and sooner or later another "masterpiece" of architecture will be built in their place. Once again, architects will play with the standards of the market and the tastes of their clients. That’s why it happens.
The question arises as to whether an investor will react easily to such projects. Yes, stereotypical behavior will work. Since everyone is doing it, the project is a win-win. But, most likely, such projects are unlikely to interest him. Many such ideas die before they are born. But is that what we want? We want an immediate action, we want a "wow” effect.
Therefore, we have to work on the ideas first, find an idea that takes our own breath away and creates a state of slight euphoria.
Hence the initial conclusion: it does not matter what kind of real estate object we create, the main thing is that it must be an undeniable novelty on the market at least, and, at maximum, a world masterpiece, which has no analogues.
What is a novelty? First of all, any idea arises in our head. It's us who see its details, and we need to make it very clear to the investor and to turn our fantasies into a real investment project and a business plan.
Therefore, we need to have pictures of the project that speak for themselves. Graphics can sell the project without any words at all. He who thinks clearly, he speaks clearly. The perfect situation is to have such a picture, such visualization when we can see this novelty with the naked eye.
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The second rule is that the project is realistic. Not every brilliant idea can be realized. Our
victory will be final only when we can fully understand that we can physically implement everything we drew up in the form of a business idea and concept of a future project. In other words, it depends on if we know where to manufacture it all, how to ensure quality, how to organize logistics and deliver everything to the construction site.
When you implement ingenious ideas, there may be difficulties with the budget. Come up with that came up, but the cost of translating the idea into reality can be unrealistic and leave no profit at all. Therefore, the feasibility of the project is the most important feature.
The golden ratio rule
The challenge in choosing an interesting investment project is to find the golden mean, the logical compromise when an increase in the budget for the project is justified by the rate of return that could be promised. And the higher this profit, the easier it is to explain the high costs. Questions are removed by themselves if, say, an average industry profit margin of 18-20% can be guaranteed to turn into, say, 30%, 40% or higher. And what happens if it reaches heights of 70% or 80% in some so-called niche projects?
How can this be achieved? How can we leave the standard yield of the real estate industry out of the equation, and how can we make a breakthrough to completely different heights? Is it possible? Yes, it is possible.
The first step, we have already paid attention above, is the novelty of the market, the uniqueness of the project, to do what others do not see and therefore do not do.
The second step is to organize and supply of everything the project needs at the lowest prices, analogue of which is not available. I am not talking about the construction materials. The market for these products has long been regulated and is highly competitive. You can't save much here.
For this reason we have created a unique web portal LUXURY WORLD, which is a source of unique products at very attractive prices. All items are bespoke collections, there is no analogue on international markets. Some factories are owned by Investment Club, some are owned by Joint Venture or factories of our trusted partners in Asia. All of them are oriented on the local elite and on the service of individual projects. Many of their products are not available on the European markets. And the most important thing for investment projects is the price, the cost of purchasing all the products necessary to decorate buildings. And it is incommensurable with European prices.
And everything else is a topic for a separate discussion.
Creating a visual effect. The Art of Design
The art of design is capable of performing real miracles. An experienced designer is able to create such metamorphosis, to create such illusions in the exterior and interior, which make the viewer, and therefore the client, look at such real estate from a completely different angle. Visual effects can be achieved in different ways and using different materials. Design is not a price, design is an idea!
A talented designer can create a very expensive atmosphere, even without resorting to astronomical budgets.
So, the main purpose of design for an investment project is to create a visible value of the object, when standing next to or inside, we have the feeling that we are surrounded by such luxury, which can not be achieved for the money that the seller is asking. Created the very atmosphere of luxury and comfort, causing the viewer a state close to euphoria.
Thus, creates the value of the object. This is where part of the mystery of the high profitability of investment projects lies: the visual value of the property is created, after which the desired market value can be claimed.
In the article HOW DO I BREAK INTO THE LUXURY HOME MARKET? we already looked at another component of the success and profitability of investment projects: turning real estate into art with a fundamentally different approach to determining the selling price. The same principle works for art gallery exhibits. This combination of design and art is a fundamentally new approach to investment projects.
Our task is to provide the investor a rate of return that is an order of magnitude higher than he expects to see in the market, to show the uniqueness of the concept and the safety of capital investment.
And now the answer to the main question. What's the most profitable investment in real estate? The answer is extremely simple: anything that is new carries the imprint of uniqueness and creates a very high rate of return.
Let's look at a couple of examples of such possible projects and uncover some of the secrets. What do you think of the idea of a boutique hotel of the highest class, for the price of a 4* hotel? For all the seeming banality of the idea, not everything is that simple. For example, let’s see this concept.
The name - Celebrities. So everything should revolve around the name. We'll choose some big names: Chanel, Cartier, Hermes, Patek Philip, Audrey Hepburn. That's enough for a start. Now we must recreate the atmosphere and character of each, making all the rooms of such a hotel unlike each other. This is one of the Investment Club's elaborate projects.
Of course, such a facility requires prime land and VIP-class service, and it is even better that brands such as Louis Vuitton would give patronage to such a facility. Why do the brands need it? They get huge PR and free advertising for their products.
So the idea is found. The first stage is passed. Now the implementation of the idea. It is necessary to create such a visualization, which would attract the attention of investors and meet all the requirements of luxury.
Drawing the conceptual design of architecture, interior interiors, we take into account the most important factor - price. As I've already said, we'll make the price of such an object comparable to the cost of a 4-star hotel. We're going to open up the idea of the rooms in such a hotel without fully disclosing the project. This is the intellectual property of the Investment Club and investors will be able to get acquainted with everything in more detail by contacting us and arranging a personal meeting.
However, let us have a look at what a suite could look like (and in such a hotel only suites are planned) for the Cartier brand.
Living room for the suite of CARTIER
Bedroom for CARTIER suite
CARTIER suite bathroom
The hospitality business has its own rules of development. The payback period in the hotel business is quite long. Taking the standards in this industry as a basis and taking into account the payback period of 10-11 years, what can we get?
We can get the cost of a night in such a luxury comparable to the cost of a room in an ordinary 5 * hotel, and this despite the fact that we live in a two-room suite, with an area of not less than 60-70 meters. Are such budgets possible for a boutique class hotel?
What hotel in the world can afford it? It is possible, and how! How is it possible? It is achieved through the cost of making the decor, where the budget can fall by half or more, compared to the standards in the industry. With this approach and possibilities, the only question is what payback period the investor will want to accept: the standard of 10-11 years or reduce it significantly by increasing the cost of the night.
CHANEL Suite, Living room
HERMES Suite Living room
HERMES Suite Bedroom
However, that's not all there is to it. The source of good income for the hotel is the restaurant. If it becomes a landmark for the city, its filling will directly depend not only on visitors to the hotel, but also on tourists. For this, the idea of the restaurant must be special. We have developed several concepts and decor ideas for restaurants that could become a national landmark.
You can make the interior of a restaurant change automatically as the seasons change and without investing a single penny more in this transformation.
Read one of our articles on this: "Interiors to be changed four times a year."
It can be a hotel restaurant, but it can also be a stand-alone restaurant whose fate is closely intertwined with the history of the city. It could become a local landmark or one of the famous restaurants of the world, the only question is what the ambitions of the investor are.
Everything in the world starts with an idea.
The Investment Club has many such ideas in its arsenal. Of course, they were not born spontaneously. This is the result of enormous experience and labor. But an idea is the main component of success.
Visit also: LUXURY WORLD - Everything for Fine Interiors in Real Esate projects. A unique portal of luxury Asian manufacturers.
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