Monday, August 10, 2009

UPDATE: Donald Trump

Late last night Your Mama received a clandestine communique from the ever intrepid Babbling Babette regarding the Beverly Hills property recently sold by an entity that links back to real estate's comb over king Donald Trump.

If the children will put on their thinking caps they'll recall that last week Your Mama discussed a 6 bedroom and 6.5 pooper Colonial style fixer upper on N. Rodeo Drive that was purchased in July of 2008 for $10,350,000 and flipped it back on the market a year later with few if any improvements and an asking price of $12,000,000.

After less than two weeks on the market the property entered escrow and, according to Babbling Babette, the deal closed in less than a week at a sale price of just $9,500,000. According to our not always entirely accurate bejeweled abacus, the sale price is not only 20% less than the asking price it's $850,000 less that was paid for the property. Oh. Dear. Ouch.

We imagine that Mister Trump, who loves to crow about how much money he has to toss around like he's living in a Monopoly world, would publicly dismiss the loss as pocket change. However, Your Mama knows deep in our dark and snarky soul that when Mister Trump (or any other billionaire) lays his head down at night on his dee-luxe Porthault linens it's just gotta hurt a little to lose nearly a million clams because let's be honest, a million bucks may not be what it used to be, but it's still a million bucks.

Discuss.

15 comments:

Anonymous said...

who cares, unless Ivanka is involved, i don't care about the trumps

Anonymous said...

Sic transit gloria mundi, Mr. Trump.

Ed said...

This isn't about Trump, it's about the state of the high end market in LA and elsewhere.

It's a snapshot of why rich folks who bought recently are wondering if they overpaid for their 12M mansion and are shaking in their boots that they'll never be able to sell without losing money. Rich people are no different than other people that way.

I'm certainly not laughing or mocking them because that's just silly, just saying that's what I see in Trump's loss.

StPaulSnowman said...

Rich people are certainly different from other people with respect to these real estate losses. Losing money on the sale of a house which is part of a large portfolio is very different from losing the only property you own. In Trumplestiltskin's case, he made out like a bandit unloading this carbuncle at any price.

Anonymous said...

Possibly it shows the $10,350,000 that Trump paid last year was an inflated price even then!?!?

The Preppy Pauper said...

You're right Mama, the loss is minor for D. Trump (even though his real net worth is always a bit of a gray area). But what does this say about residential real estate when the most high profile real estate mogul in the United States is losing money on a relatively safe bet: flipping a house in Beverly Hills? I guess timing trumps (sorry)location in real estate transactions.

Nancy/PA said...

Yeah, I don't get why he even bought the place. Even in that market, wasn't it evident by 7/08 that prices were falling and flipping wouldn't be profitable?

Well, whatever....if asked, he'll surely spin it as the "best real estate deal EVER".

Anonymous said...

I don't know any very rich people, but I know some pretty wealthy ones; in my experience, they tend to fret over losses longer than average folk. Perhaps it's ego; feeling "grifted" by someone presumed not as clever. Go to youtube and check out the scene between Paul Newman and Forest Whitaker from "The Color of Money". Interesting parallel.

luke220 said...

That he sold it so fast for such a loss indicates to me that he needed the cash fast.

Wonder how Diane Keaton feels just three blocks over. Maybe it means that she's due another price chop on hers on N. Roxbury. That said, wouldn't she be a great custodian for the Ennis house?

Anonymous said...

Just like so many other transactions for those in high brackets, a loss is subsidized by the tax laws. So, like owning a major league team, losses are useful to offset gains in other aspects of the grand revenue flow.

Anonymous said...

Of course, Trump would spin it! Even if a loss is "subsidized" by the tax laws, it is still a LOSS! I don't care about league teams, but I would much rather take the huge revenue flow then dump it into a team. Or, better yet, make positive revenue flow from a team - do your research, not every major league team is cash flow sucker. The same with the mortgage deduction, it sure nice to write the money off, but a $0.25 return on -$1.00 interest loss is still a -$0.75 LOSS!

Which bings us back to Trump. As he used to say when asked about his casino operation - they are a very small percentage of my net worth. Of course, they are - they are WORTHLESS! It's like investing your nest agg in Enron, at some point you will have nothing to show for it.

Anonymous said...

agreed luke, I would love to see Keaton in the Ennis house...

mamamia said...

hysterical. ur blog is my addiction!

gwen2xs said...

trump's $850k loss, is still someone else's 8 million+ non-gain. ugh. burn it before it spawns a guest house.

Anonymous said...

Anon 12:51 introduced a very good point that I hadn't considered -which might be motivating our impatient celebrity sellers -the tax losses! Very wise!

I realize its still a loss but it softens the blow and maybe makes one more willing to execute if there is a better investment opportunity elsewhere or if he has significant gains elsewhere (I'm sure like many rich folks, he's now got some capital gains to shelter, maybe from an investment in Goldman Sachs which has gone up 90% year-to-date)...so you may say it's stupid but rich people sell losing investments to generate tax losses all the time so Anon 12:51's point is likely correct.

Besides, these deals are all financed through holding corps, D-Trump's cash flows are not being impacted -only the financial statements he's filing at the end of the year.

Another thing to consider when people with 9 and 10 figure net worthes are doing deals in the 6-7 figure range (or low 8's, as in this case)...The Donald is not the one who picked out this house, it's likely a relative or employee playing with Donald's money, with a profit-sharing agreement and/or the chance to earn some property/asset management fees...Quite possibly, just like real estate developers who continue to develop in bad markets, if there is no action, they aren't generating fees and therefore they aren't eating...maybe Donald has to keep them employed for when/if the goodtimes start rolling again. (complicated thought but I've seen this kind of activity in businesses)