Developers of Luxury Leasing who market to affluent homeowners, often experience resistance from them regarding paying rent vs buying a home. We have all drank the Kool-Aid that says “you MUST buy a home; you are throwing your money away on rent.” If you can overcome this paradigm, you will more easily attract affluent people into your luxury developments, which can lead to increased revenue and profitability.
“Renting beats buying in Dallas-Fort Worth and 7 other major U.S. markets, housing index shows” - according to an article in the Dallas Business Journal by Bill Hethcock. In DFW, Denver, Houston, Kansas City and Seattle, people looking to amass wealth are better off renting an apartment or single-family home and reinvesting the money they would have spent on ownership, the researchers say. That’s because the total monthly cost of homeownership in those areas is rising faster than monthly rents.
Rent Café research found that the lifestyle renting trend is playing out nationwide, as renting continues to be the choice for a growing number of people with incomes that might allow them to purchase a home.
Generational Designs offers a “calculator” designed specifically for use with affluent people who are considering “rightsizing from the Big House” and either buying a smaller home or leasing. This calculator reflects the true cost of Home Ownership vs Leasing / Harvesting Home Equity. Tax deductions for mortgage interest were not accounted for in this calculator since it is no longer a tax advantage for affluent people. The “white” areas of the calculator allow the user to input varying amounts and the calculator does the rest.
The calculator show here, reflects a snapshot of a 15-year period: a scenario of selling a home which resulted in $500K of equity and purchasing another home for $750K and taking out a loan for $250K VS Leasing a luxury apartment and Harvesting the Home Equity in a safe financial investment to throw off income for the future. Clearly, for a two bedroom 1500 SF luxury apartment @$3 PSF, leasing reflects a positive cash flow, while home ownership reflects a negative cash flow.
In conclusion, if you can show them the financial advantage of leasing vs home ownership, address their living preferences in a home, and highlight the freedom gained from running a home, you will be able to attract an affluent market which can optimize project profitability.
If you have an interest in experiencing the “live” calculator, please visit our website today to book an initial complimentary consultation.