You would think that the ultra-high end real estate market has peaked. And you'd be mostly correct to think that. However, a handful of ambitious developers are forging ahead, building some of the most expensive and enormous homes in the country. Several of these spec mega mansions are in Los Angeles. Raj Kanodia is a Los Angeles developer with a $180 million spec mansion in Bel Air to sell. Kanodia made his fortune outside of real estate. He's a well-known plastic surgeon who specializes in nose jobs. Kim Kardashian is one of his patients.
Kanodia took out a loan from the Bank of Internet to build his Bel Air manse. Spec developers are usually shooting for a return on investment of about 50%, though getting 30% is more common. Kanodia walks to his $180 million spec mansion every morning from his own mansion across the street. He meditates and lays flowers on a shrine to the Hindu gods Ganesh and Lakshmi. He calls it his insurance policy.
When Kanodia started building his 34,000-square-foot mansion to flip for profit, friends in the real estate industry warned him. They told him he was out of his league. They told him he'd run out of money and be forced to sell it to settle his debts. Four years later, Kanodia is $70 million into his spec mansion and understanding why they gave him that advice. The modern glass structure he built in Bel Air has been on the market for more than a year. Rather than collecting the profits from his planned flip, he's performing as many plastic surgeries as he can to fund the millions of dollars in loans he took out to build the house as well as the enormous costs of maintaining the empty house and its grounds.
Kanodia did not find a buyer for his mega mansion and has cut the price of it by $60 million to $120 million. Additionally, he's offering to rent it for the cool sum of $1.5 million a month.
Kanodia isn't the only ultra-high-end developer losing millions on specs. The high-end real estate market is facing a glut of overbuilt and overpriced mansions in the most affluent zip codes in the U.S. Because 2014 and 2015 were such boom years, a bunch of developers got in the game, hoping to walk away with profits in the $100 million range. But now, the lucrative foreign buyers have lost interest and changes to tax laws have made it even more expensive to live in a high-tax state and in a high-priced house.
Bel Air has become ground zero of the luxury building boom and Raj Kanodia is one of the most visible symbols of it.
Kanodia made his fortune with his scarless "closed rhinoplasty" nose jobs that made him a favorite of celebrities like Jennifer Aniston and Kim Kardashian. He's also known for his skill with fillers. Kanodia has lived in a Mediterranean-style Bel Air mansion for over 20 years. In 2011 he bought the property next door to his home for $6.8 million and originally planned to build a modest house. But every time he sat down with an architect, the project grew in both size and cost. What started out as a 3,000-square-foot home became a 34,000-square-foot mega mansion with nine bedrooms, three kitchens, a fully loaded gym, spa, theater, and 2,000 bottle wine room. Perched on the top of a hill, the property has views overlooking the mountains, ocean, and the city.
Kanodia felt that because he was so good at reshaping faces, he'd be good at shaping homes, too. His joy at seeing his dream come to fruition soon gave way to the shock of financial realities. He has had to scramble to find lenders and investors – hence his loan from the very fake sounding Bank of Internet.
Kanodia listed the home in 2018 for $180 million. There were plenty of people interested in the house, but none who wanted to pay the price for it. A lot of people with little to no real estate experience got into the spec mansion business after seeing the seemingly easy profits of 2014 and 2015.
Kanodia is pretty philosophical about how long his spec mansion has been on the market. If he does not find the right buyer, he'll live in the house himself and sell his current house, which could sell for more than $20 million. He even had the foresight to build a clinic on the lower floor so that he can do surgeries and injectables from home to pay the bills.