Country Living Series

Wednesday, March 31, 2021

Mega-mansion woes

Even though the population is thinner in this new area we're living in, there are still a fair number of McMansion-style dwellings we see perched on top of hills with splendid views in all directions. Don and I passed one on the way to town some time back, and we were remarking on how exposed it made the house look. He said something that stuck with me ever since: "They build there so they can see and be seen."

The "see" part I get. Many of these homes command spectacular views. But the "be seen" part baffled me. Who wants to be seen? Maybe we're just odd, but "being seen" is not one of our goals in life. I dunno, maybe that's the difference between introverts and extroverts.

Which leads, in a convoluted way, to an article I saw a few weeks ago entitled "$500 million LA mega-mansion faces default." The article discusses precisely what the headline covers: How a developer built a 100,000 square foot spec house in Bel-Air called "The One" in hopes of making a huge profit. He took out a $82.5 million loan to fund construction.

From the article: "Niami [the developer] has had some bad luck over the last year. He sold an LA mansion called 'Opus' that was once listed for $100 million for a 50% haircut during the virus pandemic. Perhaps the developer has fallen on hard times, or the super-luxury real estate market has stalled. Whatever the issues are, and why Niami can't service his debt on The One comes at a precarious time for the real estate market as interest rates have violently risen over the past few months. ... [T]he lender, who is well aware of market conditions, wants their money back and recently slapped Niami with a default notice. The developer has just 90 days to repay the loan or restructure the agreement in some way so that [the lender] doesn't force the sale of the home. ... Now the developer faces notice of default where the lender could force a sale in market conditions that may not be conducive for top dollar."

There you go, folks. Problems of the rich and famous.

My first thought was, "Who the heck needs a 100,000 square foot home?" The answer is, "Those who want to be seen."

Now segue to this little fluff piece I saw recently entitled "7 Ways to Sabotage Your Financial Future." It contained some decent advice, most of it not applicable to Don and me because we were never "investors."

But one paragraph struck me as something Mr. Mega-Mansion should have taken to heart. One error people can make that sabotages their financial future is "Making big purchases with irrevocable consequences":

"What are decisions that can lead to financial ruin? Big decisions that are hard to undo, such as the purchase of a house, car or boat. There’s a house for sale in my suburban neighborhood that has been on the market for years. It’s beautiful and has truly amazing architecture. The only problem is it is about 10 times more expensive than every other home around it, and nobody else seems to share the owner’s specific taste. Millions of dollars of equity are tied up in a decision to build an asset that can’t be liquidated. I don’t know the owner’s story, but I’ve seen many stories like it, and it isn’t pretty.

Resale value should always be considered when making big purchases. The more unique an asset is, the fewer buyers it brings. This decision could leave you stuck with a unique, but illiquid asset. Tying up a significant percentage of your net worth in illiquid assets can be a great way to sabotage yourself. If and when you need liquidity, there’s no guarantee that a buyer would be willing and able to pay what you need for that asset."

I'd say that applies to the mega-mansion, don't you?

I won't go so far as to say I feel sorry for this developer – there are a lot of people struggling out there far more deserving of pity – but it does make our own modest lifestyle seem wealthy by comparison. We may not own a 100,000 square foot mega-mansion ... but then, it seems the developer doesn't either.

Besides, what does this mega-mansion have that we don't have?

Their living room:

Our living room:

Their library:

Our (partial) library:

Their master bedroom:

Our master bedroom:

Their weight room:

Our weight room:

Their dining table:

Our dining table:

Their patio:

Our patio:

All this, and we don't have to service a $82.5 million loan, either. Now tell me, who leads a more peaceful life?

Perhaps a wish not to "be seen" isn't so odd after all.

15 comments:

  1. Here in the Hamptons, no one wants to be seen. Very, very high hedges hide the $100 million properties from view. I guess that's the difference between really wealthy people and those who just want to seem wealthy.

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    1. Ah, yes; the Hamptons. I grew up on Long Island. I was also stationed in Westhampton Beach in the Coast Guard. I know exactly where you're coming from!

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  2. I don't know what I'd be termed. I'm usually quite outspoken, but when I'm not, I want left alone! - lol

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  3. I would take your place anytime over the McMansion. Your house looks like a home, the other a museum.

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  4. Differences? No books in their bookshelves and no Mr. Darcy in their living room - for starters!!

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  5. We got very lucky when we built our retirement home. We already had a very nice home in an airpark but it had not sold. I lowered the price and asked the folks that were going to buy ours to lower theirs the same amount. We closed 1 week before the market cratered back in 08. We were so very blessed as we were almost stuck with 2 houses!

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  6. Patrice, I enjoy your view a great deal more.

    I cannot fathom or understand that kind of money for a home. Were I to somehow to have it, I would simply live as I have, somewhere away, and spend my time doing what I want, instead of what I have to - the definition of freedom.

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  7. We live in SW FL in an area with those over 65 are in the majority. In our HOA the minimum sq ft was 1400, as of Jan it is 1800. We only bought a 3 BR house for the resale value - 2BR 2BA condos sell well, but not houses. Now most of the new homes are around
    2000-2500 sq ft. with 4 BRS and they are selling. We like cozy, lived in homes and don't want to rattle around in one. I've always thought McMansions were for those who wanted to show off/be seen.

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  8. One looks used and lived in, the other not used or lived in, like a photo op. Like Dave Ramsey always says, debt free is king.

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  9. Shelter is necessary. Too much shelter becomes the "god" you serve. ...No thanks...

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  10. Yep, right there with ya! Our dead end road just suits us fine, and our old farm house, barn, garage and 25 acres isn't owned by any banker. Livin' the good life here on the ridge...thank you!

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  11. Forgot to wish you and Don and the girls a Happy Easter!

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  12. I would take your home or mine over theirs any day. And I’m pretty sure that I would immediately lower the property value when I added chicken coops and a goat barn.

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  13. Those "mansions" look like are more suitable for the Jetson's to be living in on mars, devoid of all signs of life.
    Your home is comfortable and inviting and since it's private, the inviting part is at your discretion. My kind of place.
    When we shopped for a place in Idaho, the realtor from CDA took us to a place on top of a wooded hill that was an unfinished monstrosity. We had to leave her car and use our ice cleats to hike up, which I am unsure of why we even followed her up. The owner/builder had died after mostly completing the outer timber exterior and roof.
    It faced NORTH. I called it the fortress of gloom.
    On the hike down, the realtor fell and hit her young head on the ice, then she got the car stuck sideways on the icy "road" and it slid underneath a tree that had fallen over the road.
    I think that estate probably took a severe haircut on that massive structure. It wasn't a dream home, it was a nightmare.
    STS

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