Investing in real estate has always been one of the preferred ways of diversifying your assets since the beginning of business as a concept. It is estimated that 77 percent of the investors that have a net worth of more than $1 million have real estate in their top priorities for investment. Direct ownership is also the number 1 pick for investments in both the residential and private markets.
The appetite for investments in residential and commercial real estate is already well known among investors, but a new trend is appearing: many investors are looking into the vacation home markets as well. In a recent report, Morgan Stanley has shown that after the financial crisis of 2007-2010, many millionaires are looking into fresh markets to invest their money, and vacation homes for both residential and rental purposes are very sought after. Numbers show that up to 23 percent of investors would like to invest in this sector during the 2015-2016 period, up from 18 percent in the 2013-2014 bracket. The report suggests that millionaires are slowly moving their assets from traditional long-only strategies to find good performance and stability in the newly reborn California real estate market.
One of the most important benefits of investing in real estate, and especially in vacation homes, is the constant flow of liquidity coming from rental opportunities, as well as a possible appreciation of value in the current economic situation. What’s more, numbers show that many foreigners are also attracted by this new surge in real estate investment, mainly because of the safety of the California real estate market, as well as the value of dollar as a reserve currency.
California is considered one of the most sought after locations for real estate investments in the country, rivaling established cities and areas, such as New York, Miami or Chicago. Thanks to its diverse geographical features, pleasant climate and good economy, including immense career possibilities, the state offers a huge business opportunity for investors. The vacation home market is vastly represented in many locations, including the San Diego area, the Lake Tahoe area, the Los Angeles area and the bay area of San Francisco. However, analysts point out that one of the best areas to invest in vacation homes is the Russian River Valley. It is expected that the vacation homes and real estate in Russian River Valley will expand tremendously during the next years, thanks to a massive influx of capital coming from multiple investors who are looking for a place to invest their liquid assets.
Investing in vacation homes also has other benefits when compared to traditional real estate investments. The returns can be vastly superior to other segments, mainly because the guests are temporary and will pay for a nightly basis. The problem however, is to find enough guests on a consistent basis that will use the vacation home, but this issue can be resolved with the help of a good travel company. A professional travel and marketing agency may fetch a commission fee of 10 to 20 percent, but the returns can be massive, especially during peak seasons, which can be either during summer or winter in California. In conclusion, the real estate market looks very good for the coming years and investors are flocking to California, as a great place to buy vacation homes. Although investing in a vacation home might keep your home empty during poor seasons, the occupancy levels during peak season will bring in huge profits, resulting in a very good overall performance.