While traditional real estate investing is a well-known financial strategy, building a luxury custom home offers a profitable investment opportunity that few people are familiar with. Custom home construction is often seen as a lifestyle or personal choice rather than an investment path. However, a custom home in a prime location that is well designed and takes into consideration market trends has a large value potential and can be a highly profitable real estate investment.
It is well recognized that real estate can yield high returns and allow for investment portfolio diversification. It offers multiple paths to building wealth, such as appreciation, rental income, tax advantages on income and capital gains, leverage, and hedging against inflation. Unlike bonds, stocks or crypto, a real estate investment is a tangible asset that you can live in, rent, sell, borrow against, or pass down as generational wealth.
The luxury real estate market is different than standard property investing. It is less focused on a fast return on investment and more on owning highly desirable, irreplaceable assets. Many luxury real estate investors hold on to these properties for higher long-term returns and to store wealth in an asset they can use and derive revenue or financial benefits from for years and generations to come. A luxury custom home is unique when compared to traditional real estate investing as it provides both lifestyle and legacy value.
The Florida real estate market also has special features, given that it is a top destination both for retirement and vacation, which creates a high demand for primary residence and vacations home properties, particularly in coastal areas and urban centers.
Since the Sunshine State offers business-friendly environment and no state income tax, it also attracts many out-of-state buyers and international investors. In recent years, hundreds of thousands of new Florida residents have relocated from California, New York, Texas, Georgia, and Pennsylvania, for personal, business, or real estate investing purposes.
The Central Florida area in particular is also uniquely positioned to attract new residents as well as domestic and global investors. Walt Disney World and Universal Studios theme parks in Orlando, the Kennedy Space Center Visitor Complex at NASA Kennedy Space Center in Merritt Island, the world’s largest cruises from Port Canaveral, showcases and parades of classic cars and NASCAR races at the Daytona International Speedway in Daytona Beach, and beautiful beaches all along the Atlantic Ocean can all be enjoyed within approximately an hour’s driving distance.
All these top tourist attractions welcome visitors year-round and are located near continuously growing cities like Kissimmee, Sanford, Ocala, Palm Coast, Jacksonville, and St Augustine, enhancing the area’s short-term rental income potential.
Custom houses designed by Benjamin Butera built by the same real estate investor in three different locations across Ormond Beach: golf course, oceanfront, and riverfront
3 Ways A Luxury Custom Home Is A Good Real Estate Investment
1. Highly Sought-After Locations Hold Value
Location, location, location.
It is well-known that property location is a main factor in determining a real estate asset’s investment potential. Since location influences desirability, and desirability affects value, properties in premium/prime locations tend to hold their value even during economic downturns. Some of the Central Florida real estate locations renowned for their high luxury custom home prices include:
- Windermere, particularly along Millionaires Row and the Isleworth private golf community, Orlando, Winter Park and the Heathrow community in Orange County
- Ponce Inlet, Ormond Beach, Port Orange, and New Smyrna Beach in Volusia County
- Flagler Beach and Palm Coast and the Hammock Dunes community in Flagler County
- St. Augustine and Ponte Vedra Beach in St. Johns County
The Sunshine State has a high number of gated communities that offer safety, privacy, amenities, and community living for different lifestyles mainly in suburban areas and coastal Florida. Planned communities appeal to many seasonal residents like snowbirds, retirees permanently moving to Florida, luxury home buyers looking for a second home, and young professionals like lawyers and doctors who relocate their practice to Florida.
These buyers often seek a turnkey, low-maintenance lifestyle and, especially in the luxury real estate market, they value the security and privacy that a gated community has to offer by keeping non-resident traffic and solicitors out. These planned communities often have HOA rules that set and maintain standards, helping preserve long-term property value.
With over 200 days of sunshine a year, Florida is a top destination for any golfer, boater, sailor, private pilot, aviation enthusiast, equestrian, polo fan, pickleball aficionado, tennis player, or other active people who enjoy doing outdoor exercise year-round. Many large-scale, master-planned communities in Florida include resort-style amenities like a clubhouse, pool, spa, tennis court and pickleball court, all in the same location.
Custom Homes in Island Estates in Hammock Dunes built by the same Florida investor each with its own custom, original Ben Butera design
Other exclusive communities, like golf communities, have golf courses as their central amenity, and residential airpark or fly-in communities offer a private plane hangar and direct airplane runway access. Equestrian communities offer luxury home sites with large acreage as well as stables, horseback riding trails, and polo fields, while waterfront communities often include a marina, yacht club, private dock and water access to the intracoastal waterway or ocean.
Oceanfront lots and riverfront land are limited, so Florida real estate with water access and views tend to sell at a higher price and attract both domestic and international investors and buyers. Since there is always a high demand for prime locations, the luxury real estate market tends to be less volatile. This is why well-designed Florida waterfront properties historically hold their value and rebound quickly after a recession.
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2. Timeless Luxury Design Holds Value
A thoughtfully and carefully designed custom home can stand out in the luxury real estate market. Architectural design elements like a negative edge pool or infinity pool with spillover spa, walls of windows for an unobstructed panoramic view, automatic sliding doors for an indoor-outdoor living space, an open floor plan, vaulted ceiling design, grand entrance with pivot doors, an atrium like a foyer with a high ceiling or a central courtyard, and drive-through portico or porte cochere are timeless luxury features that give a sense of grandeur and add value to a luxury real estate investment.
Additional features like a multiple car garage that acts like a luxury car showroom, a master bedroom suite with walk-in closet, fireplace, lounge area, balcony and ensuite bathroom, a spa bathroom with steam shower, rain shower, and soaking tub with a breathtaking outdoor view, and a chef’s kitchen with custom cabinets and a Butler’s pantry, hidden pantry and wine cellar for a timeless kitchen design can further increase the property value of a luxury custom home.
Other unique features can command a premium price if executed tastefully and aligned with the tastes of luxury real estate clients, like:
- floating staircase
- fountain
- mezzanine
- indoor pool
- private spa with sauna and steam room
- cold plunge pool and massage room
- home gym
- safe room
- home theater
- game room or family room
- indoor and outdoor sports court
- bar
- library or study
- luxury landscaping and garden design
- pool house
- outdoor kitchen with pizza oven
- modern courtyard
- covered outdoor patio
- pneumatic vacuum residential elevator (PVE)
- dock
- airplane hangar
- helipad
- horse stable
- art installation and display
- sound system
When combined with smart home automation including irrigation and grey water systems, superior building materials like quartz, marble and granite stone as well as hardwood for a durable and sustainable design, luxury lighting, and premium finishes, a custom home can maximize its resale value or rental price. A new, custom built home is also often more desirable than an older home as it incorporates an updated house layout for better Feng Shui, energy efficiency capabilities with solar panels and battery storage, as well as strong building materials like impact windows for weather-resistant construction to withstand Florida hurricanes and storms.
Thoughtful architectural design expertly combines elements from different design styles like mediterranean, coastal, contemporary, traditional, farmhouse, and green design. By seamlessly blending modern design elements with distinctive features, such as a custom barn door, oversized farmhouse kitchen sink, coffered ceilings, wall paneling, crystal chandeliers, polished concrete accent wall, frameless cabinets, vintage lighting, and a sand-toned neutrals and white color palette, it is possible to create an eclectic yet cohesive and refined aesthetic that feels both personal and timeless at the same time.
A luxury custom home design from award-winning architect also commands a higher sales price in the luxury real estate market. In 2024, a riverfront home in Ormond Beach, also designed by Ben Butera, sold for $4.5 million, placing itself in the top 3 most expensive homes sold in Volusia County that year.
In 2022, an oceanfront home in Ormond Beach designed by Benjamin P. Butera sold for a record-breaking $4.5 million, becoming the area’s highest per-square-foot house sale. This luxury custom home was sold once again in 2023 for $5.5 million, realizing a 22% profit equivalent to a $1 million capital gain in only a year.
These two luxury custom home examples illustrate how our firm’s signature design style can turn your custom home into a real estate investment that pays off.
3. Rental Opportunity
A luxury custom home with a short-term rental use permit can be a great revenue source. Real estate properties located in a top vacation destination or tourist area like Florida can be rented for higher rates per night. Some rental expenses are tax deductible, which maximizes rental profit. Even if not rented out, having the option of short-term rental use increases the real estate property’s resale value.
Why Hire An Architect When Building A Luxury Custom Home
When building a custom luxury home, especially in a high-stakes market such as waterfront Florida where building materials, site design, and structural design like seawall construction, home orientation, window layout, and exterior shutter design, that can offer protection and resist hurricanes and tropical storms are must-haves, hiring an architect is crucial. In fact, it is one of the most valuable investments you can make early in the process to avoid costly mistakes.
A professional architect will bring vision and function together, translating your unique lifestyle into a dream home that looks, feels, and flows beautifully. He will incorporate timeless luxury design elements that increase the rental price and resale value potential.
A luxury home architect will also maximize the land value, especially on waterfront property or oddly shaped lots where it is important to work around topography and land elevation. He will take full advantage of the gorgeous views, creating privacy while keeping openness. He will also maximize the square footage while meeting all building code compliance and zoning requirements, setback, and height restrictions.
An experienced architect in Florida that knows the area well will know exactly what architectural drawings are needed to apply for permits with the city or county and help you obtain HOA approval if your luxury home is located in a gated community or planned real estate development. Luxury buyers care about quality, so obtaining building permits and documenting all building materials used and architectural designs is very important.
A skilled Florida residential architect will also have the necessary skills to put together, consult, and collaborate with a multi-disciplinary team of engineers, interior designers, landscape architects, and building contractors. He will be able to assist in coordinating all aspects of the build to minimize mistakes, maximize alignment, and stay on budget and on schedule to meet your construction timeline.
Our full-service firm has a vast design portfolio of luxury custom homes in coastal Central Florida as well as the expertise, capabilities, architectural design services and the right team to design the house that your lot deserves. Build your new home in paradise and take advantage of the financial opportunity that a luxury custom home in a top building location has to offer.
Contact us to start designing your dream home and next luxury real estate investment in Florida!
