People love to live beyond their means – hands up if you fit into this category. In the last few years mortgages and lines of credit were given out as if the money was just going to fall out of a tree to pay for it. Now that the rug is being pulled out from under all of those people that got in over their heads it may be a time to consider investing in luxury real estate.

Smart investors know that the economy will be back on an upswing and soon people will be spending money again. Right now you can get luxury real estate pretty cheap if you look for foreclosed properties and seized assets that are sold at auctions. But there are pros and cons to any luxury real estate investment that you always need to weigh so that you do not lose all of your money. Be smart when investing and be especially smart during a bad economy.

When you decide to invest in luxury real estate in a bad economy expect to hold that real estate for a while before you will be able to sell it. A downturn in the economy could last months and even into a year or more so be sure that you have figured sufficient holding funds for your luxury real estate.

Holding funds include money set aside for such expenses as mortgage payments, taxes, utilities, and any regular maintenance that needs to be done. You may also want to remodel your luxury real estate try and get a maximum return on your investment so you will want to figure those costs in as well. When you sell your luxury real estate there will be closing costs and real estate commissions that you will need to pay. It may seem like a lot but a failure to take all of this into account will come back to haunt you. So be smart and take all of your costs into account before you sign on the dotted line.

The Ups And The Downs

If you find that you can afford to invest in luxury real estate during a bad economy then your potential for profit could be great. Depending on the deal you get you could be looking at a substantial profit even if you have to hold the property for a long period of time. There is always risk in luxury real estate but if you are able to buy very low in a bad economy then you could see a larger return from your investment when it finally comes time to sell.