Adding a Luxury Property to Your Portfolio: 10 Things to Consider

Investing in a luxury property can feel like hitting the jackpot in the real estate world. Gleaming finishes, top-tier amenities, and tenants willing to pay a premium for exclusivity? What’s not to love? But as with any investment, diving into the high-end rental market comes with its own set of risks and rewards.

If you’re a landlord thinking about adding a luxury property to your portfolio, here are ten key factors to weigh before signing on the dotted line.

1. What Does “Luxury” Mean in Your Market?

Luxury isn’t a one-size-fits-all term. What screams high-end in Portland might not even register in LA. Is your market about beachfront villas, mountain chalets, or city-center penthouses? Does “luxury” mean automated everything, or is it all about artisanal craftsmanship and history?

Spend time studying your market. While local renters may look for a wide variety of options, Portland’s population tends to value eco-friendly housing and ease of biking and walking. Historic neighborhoods and proximity to restaurants are other selling points in our area.

To determine what makes a top-tier property, visit open houses, talk to agents, and dig into listings to see what qualifies as luxury in your target area. The better you understand the definition of luxury where you’re buying, the easier it’ll be to pick the right property.

2. Consider the Financial Costs and Benefits

Luxury properties are showstoppers — but don’t let the sleek aesthetics and rooftop gardens cloud your judgment. At the end of the day, this is an investment, not a passion purchase.

Run the numbers like your ROI depends on it because a poorly considered luxury investment can end up being an expensive mistake. What’s the rental demand for high-end properties in your area? What’s the average rent for properties similar to the one you’re eyeing? Factor in all costs — purchase price, renovation, insurance, HOA fees, maintenance — and see how the potential income stacks up. If the numbers don’t make sense, it’s time to look at more market-friendly options that will make for a safer investment.

3. Know Your Audience

Who’s going to live in your luxury property? Knowing your ideal tenant is crucial. Are you targeting corporate executives? Affluent families? Jet-setters who need a short-term rental to keep them in style?

Different tenants have different needs. Families might prioritize school districts and large kitchens, while single professionals might care more about proximity to nightlife and coworking spaces. The better you understand your audience, the better you can tailor the property to their needs — and market it effectively.

4. It’s Not Just About the Property; It’s About the Lifestyle

Luxury tenants aren’t just renting a house; they’re renting a lifestyle. That means your property isn’t just four walls and a roof — it’s a package deal.

Think about amenities that elevate the experience: private pools, wine cellars, gyms, or concierge services. Even the neighborhood matters. Is it walkable? Does it have upscale shops, Michelin-starred restaurants, or private clubs? The more you can sell the lifestyle, the higher the rent you can command.

5. Maintenance Can Be Expensive

Here’s the not-so-glamorous truth about luxury properties: They’re high-maintenance. If you’re used to managing standard properties, brace yourself for a new level of upkeep. Luxury tenants expect everything to be perfect, and any slip-ups can hurt your reputation. Make sure you have a solid plan — and budget — for keeping everything in tip-top shape. To keep up your professional image as a luxury property, you’ll likely need to hire a professional maintenance company.

6. Marketing: Go Pro

The way you market a luxury property matters. A blurry iPhone photo and a generic listing aren’t going to cut it. Invest in professional photography, videography, and maybe even drone footage. Consider staging the home to show off the high-end features that tenants are looking for. And don’t forget about high-end rental platforms or working with agents who specialize in luxury properties.

7. Expectations Are Sky-High

Luxury tenants are paying a premium, and they expect premium service in return. That means you — or your property manager — need to be on call. Maintenance issues need to be addressed immediately. Communication should be professional and prompt. Delivering anything less than top-tier service could lead to bad reviews, tenant turnover, and a hit to your reputation.

8. Diversify, Don’t Overextend

Luxury properties can be a great addition to your portfolio, but because the high-end market is more sensitive to economic downturns, it’s wise to expand your options. If you’re heavily invested in luxury properties, balance things out with mid-range or affordable housing units. That way, if the luxury market slows down, you still have a steady income stream.

9. Legal and Tax Considerations

High-end properties often come with unique legal and tax implications. You may need specialized insurance for high-value homes, and local regulations for short-term rentals can be strict.

And let’s not forget property taxes. Luxury homes are taxed higher, so make sure you understand the full financial picture before you buy. Consult a real estate attorney and a tax professional to avoid any nasty surprises.

10. Think Long-Term

Luxury properties are more than just income generators; they’re long-term investments. In desirable markets, they tend to appreciate faster than standard properties, offering a nice boost to your net worth.

That said, appreciation isn’t guaranteed. Research market trends, economic forecasts, and the area’s development plans to make an informed decision.

The Right Property Manager is an Invaluable Partner

Managing a luxury property is a full-time job. From vetting high-end tenants to overseeing meticulous maintenance, there’s a lot to handle. If you’re not ready to be on-call 24/7, hire a property manager with plenty of experience managing luxury rentals. Rent Portland Homes Darla Andrew’s Office has years of experience in the Portland rental market and can help you expand your portfolio with luxury options or diversify into affordable housing. We ensure your property meets tenant expectations while giving you the freedom to focus on other investments. If you’re interested in adding a luxury property to your list of rentals, we’d love to discuss your options! Give us a call today at (503) 515-3170 or fill out the contact form on our website. We can’t wait to chat.