PEOPLE CREATE VALUE, NOT BRANDS.
There are very few industries more prestigious than luxury real estate.
By nature, it’s an industry that attracts the best and brightest, and of course the wealthiest.
But let’s be real — can there be any other business where there’s so much bull sh*t?
The thing is in luxury real estate, it’s extremely easy to spend way too much money.
Actually making money is a whole different story.
Yes, it’s alluring. Yes, it’s a pretty safe hedge play. And also yes, it can also generate really strong returns. However, that’s only if the acquisition, the asset, and the operating capital are managed properly.
Great investment opportunities get snatched up fast. Really fast. And that’s only the beginning of a long investment lifescycle.
A multi-million dollar asset can produce strong dividends with 7-figure gains, or burn just as much capital within the same timeframe — the only difference between the two outcomes is how the asset is managed.
And let’s be fair, simply breaking even isn’t a great option either. That’s just wasted potential and it’s essentially the same thing as deteriorating wealth.
The amount of capital and the power it has must be respected and invested wisely.
The stakes are high.
So how are you supposed to make such a big decision with not that much to go off of?
Now, I can’t tell you who you should choose to guide your luxury real estate investments or manage your assets, but since our team has a combined 20+ years of experience evaluating hundreds of luxury real estate opportunities worth over $500M in acquisitions, maybe I can show you how to choose.
First, pick somebody who exclusively works in the luxury segment of the industry, day in and day out, and has a proven track record of producing exceptional results across their entire portfolio.
No one-offs or outliers. Even a broken clock is right twice per day.
Consistent wins across the board (even through periods of economic distress) show a trend. You want that momentum on your side.
Second, forget how big a management firm or agency is. Because in our world, a big agency looks like it would be the best. However, size hurts you instead of helping you.
Big operations with big portfolios are overextended and ineffective, heavily fragmented, and an administrative nightmare. They are more concerned with getting new properties and lowering their own operating margins than they are producing exceptional results on a per property basis.
Third, don’t pick someone you think you might feel ‘good’ about, or think you might like as a person.
I know this might challenge most investors’ beliefs, but you should pick someone you can argue with, and disagree with, and still, even though you’re frustrated, know that everyone will still show up and work to make your investment move forward.
I tell personally clients NO all the time. It’s never an easy conversation to have, but I’m not willing to let my clients overspend or sacrifice 5-figure, sometimes even 6-figure returns because of external factors that have absolutely no bearing on their asset’s operations or the growth of their investment.
Again, we’re in a high-stakes industry, with multi-million dollar transactions and 7-figure gains. So you don’t want to hire primadonnas, or sensitive types. You need doers that are willing to fight for the integrity of your investment — even if that means fighting you.
Finally, you should pick people who actually know luxury real estate, not just vacation rentals or vacation rental management.
The luxury segment of the real estate and vacation rental business requires a completely different way to do business. The right firm won’t be implementing the same old strategies that you see everywhere else.
Traditional strategies don’t work. And the pure luxury strategies don’t necessarily work either.
The vast majority of luxury hotels never sell out their most expensive suites at any sort of volume that would make sense as a highly profitable, or even financially viable business on its own. However, the most expensive suites do help increase the perceived value of their basic $1000-$1,500 per night room rates, which are what actually keep the operations profitable.
Our industry’s top performers are small firms — like us — people who love the art of design and building exceptional real estate, and who understand that there is a fine balance that must be achieved in order to make the luxury vacation rental strategy highly profitable.
And mark my words, you are never going to see exceptional results from some firm whose idea of a luxury vacation rental operation means a half-day photoshoot, then relies heavily on ‘automation software’ and ‘smart technology’ for yield management and distribution, and then manages bookings through an endless rotation of entry-level customer service representatives who know nothing about the property besides what it says on the listing itself — even if they claim to have the best ‘network’ or ’concierges’.
Ultimately, the real value in luxury real estate is not in the materials, structure, or designer furniture brands, and it certainly isn’t created by managers who are preoccupied with forcing company growth, hunting for their next round of financing, or inflating their company’s share price in the public markets.
The value is created by the actual people who work intimately with each asset to build inspiring living experiences, and who have the rare ability to share it with those who will appreciate it most.
At VRP, our people are our most valuable asset, and we have a proven track record to show for it.