4 Different Ways YOU Can Buy This $44MM Los Angeles Estate
Have you seen this $44,000,000 house on Christie’s Greatest Estates?!
Wait, house is the wrong word. Estate is the right one. We’re talking a 5-bed, 8-bath newly-constructed piece of art on a spacious hillside lot in LA’s Doheny Estates. Want to elevate your lifestyle? This is the property to do just that. You’ll get a world-is-laying-at-your-feet layout, impress-everyone-you-know views, and top-shelf, custom-crafted fixtures!
Not sure this estate is the right fit for you? Just remove the Lamborghini to seriously reduce the douchebag factor. Ah, there it is!
Pretty sure you need this house. How can we make that happen for you?
Lucky you, I’ve come up with 4 different ways you can make this estate yours!
Option 1: Earn Enough Money to Buy it as Your New Primary Residence
The first option is to just buy it like any other house. What would it take to do that?
Before we can calculate a mortgage payment, we need to make a few assumptions first about the purchase price, loan amount, interest rate and taxes:
* Assumption 1: You can probably negotiate the price down by 3%, which is average in the Bel-Air/Beverly Crest area of LA (source), so your purchase price will be $42,680,000
* Assumption 2: You can afford a 20% down payment of $8,536,000, so you only need a loan of $34,144,000
* Assumption 3: You can get a loan at 4% interest and no PMI required
* Assumption 4: Insurance will cost $8,000/year
* Assumption 5: Property taxes will be 1.25%
With all of these assumptions, your calculated monthly payment is…
drumroll please…
$208,133.68
Now, multiply that monthly mortgage payment by 12, and you’ll be spending $2,497,604.14 per year on this mortgage.
Ok, so how much money do you need to make to afford that? Well, if you’re looking to spend a slightly-high 35% of your gross income on your mortgage, you’re going to need to make $7,136,011.83/year 😐
Let’s maybe look at some other options.
Option 2: Get Roommates
This spectacular estate has 5 bedrooms. Under the general occupancy rule of having 2 people per room, plus 1 other person in the house, you can have 11 people living here comfortably.
Splitting the $208,133.68 mortgage payment between you and your 10 roommates, you’ll just need to pay $18,921.24 per month, per person. Which, yeah, is high for a roommate situation, but way more doable than footing the bill yourself!
Since you’re each just paying $227,054.92/year on the mortgage, each person only needs to make $648,728.35/year to comfortably cover their share!
Still afraid you might have a hard time coming up with the $8.5MM down payment? Dividing the down payment between you and your 10 roommates, or maybe co-owners, you each only need to come up with $776,000!
Still a little rich for your blood? Perhaps we should look at some investor-backed options.
Option 3: Get Some Investors to Help You Buy and Rent Out the Estate
Zillow estimates you can rent this house out for $75,000/mo. That’s not going to cover your $208,133.68 mortgage payment, so that’s a no-go. Instead, you’ll need to position this house as a high-end venue.
You know who needs fancy digs like this? TV reality shows, music video producers, and film production companies. Magazines love to rent places like this for photo shoots. Executives love to rent places like this for wrap parties and other socially-focused work functions. This could even be a crazy high-end Airbnb!
So, you leverage some investors to pool the down payment. Those investors also split the mortgage bill on slow months. But the plan is to rent the house out for at least $20,000/day. If you can just keep Fridays, Saturdays, and Sundays all booked every week, every month, you can pull in $240,000 to cover the mortgage and start paying the investors back. Negotiate higher fees or sell out more days to turn a profit for yourself and your investors!
Just check zoning and permit requirements first.
Option 4: Re-zone to Make the Estate a Boutique Spa Retreat
What if you can convince the city to rezone the property from residential to commercial? That could open the door to make this a killer boutique spa retreat! People (ahem, celebrities) will pay big bucks for privacy and discretion. If you and your investors can guarantee both, and provide stellar service, you can build a clientele list that will generate a serious profit.
How do you guarantee privacy and discretion? You only rent to one party at a time. There are only 5 rooms, so you’d offer a spa retreat package to one celebrity and their 4 closest friends. No other guests would be around to get star-struck or snap secret iPhone photos. As long as you hire a solid staff with high values, you’re golden! And have you seen the 8 bathrooms in this place?! It’s begging to be a spa.
Assuming $1,000/mo on utilities, $400,000/year on an 8-person staff, and a 40% vacancy rate, you’d only need to charge $2,657.17 per room, per night to meet your mortgage payments. Increase profit margins with a swanky healthy restaurant on the ground floor and a juice bar in the pool.
Decision Time
So, which option are you going with? Gonna find a job with a $7.14MM salary? Gonna take on some very well-off roommates? How about finding some investors and turning the house into a destination venue? Or using your investors to create a boutique spa retreat?
And you probably thought you’d never be able to afford a $44MM listing! Enjoy your new estate!
Fine Print: Please, for the love of all that’s good and holy, don’t actually buy a property you’re not completely sure you can afford.