Ricky Martin may be a chart-topping pop star who shakes his bon-bon for millions, but when it comes to his real estate portfolio, the millions disappear as he fails to turn a profit as a house flipper. The Latin crooner recently re-listed his nearly 10,000-square-foot oceanfront estate in Golden Beach, Fla. for $18.9 million. That's just under $3 million more than he originally paid back in 2007.
Three years ago, after dropping that $16.25 million on his 641 Ocean Blvd. five-bedroom, seven-bathroom Spanish/Mediterranean pad, he attempted to make a juicy 38 percent profit by listing the two-story mansion for $22.5 million a mere six months later. The Sotheby's listing reveals a five-car-plus garage, gardens, a media room/home theater and terrace space. If Martin gets his asking price, he stands to make 16 percent, which is more than most sellers currently are getting.
Unfortunately for Martin, he's likely livin' la vida loca if he thinks he can turn a sizable profit in this market.
According to Jeffrey A. Cloninger, a broker who has sold over a half-billion dollars in real estate in Palm Beach, Fla. (and who isn not the broker for Martin's property), the housing market in Florida is at its all-time worst.
However, he says, "I think this time the worst really is over and that the pendulum is swinging back in the other direction, meaning things are improving.
"It was like a perpetual free-fall for a few years -- where once you thought you hit the bottom, there was another rung on the ladder to climb down. I think we are at the point where sellers are saying enough is enough. Most of that low-hanging fruit has been picked," Cloninger says. "And those affected by the economic crisis, or a death, or a divorce, and needing to sell immediately, are gone. Right now I am not seeing financially threatened sellers."
While Cloninger admits that we might still have to skim the bottom for a few months, he does say that the era of flipping is history.
"That ship sailed a few years ago. People can still buy investment properties that they can flip, but the profits are so modest that it's not worth it until the market improves. Ten and fifteen years ago it got crazy, where you could flip before you closed and make a lot of money. We learned a lot of valuable lessons from that crazy time ... and the amateurs have been weeded out."
So what is multimillionaire Martin doing trying to flip (well, sort of, now that three years have passed) his casa grande?
Well, sometimes people like to test the market and just see what's going on. And of course there are plenty of people who just pull numbers from the sky and see what happens. Such experimenting doesn't have the same rewards, though, as five years ago.
"In general I think most anyone who has bought a property post-2005 and needs to sell it now would be lucky to get their original investment back," says Cloninger. "The only people who could hope for a propfit are those who make home improvements, like adding on square footage and renovating."
Thankfully, the financial future of the famous father of twin boys isn't riding on the sale of his Golden Beach home. He reportedly has other homes in Miami, Puerto Rico and New York. But for the rest of Florida, what does this mean?
"I think in some of the over-condominiumed markets in the larger Florida cities, there is still a pretty tough road ahead of them," says Cloninger. "In the town of Palm Beach, though, we've already bounced back. I have more clients looking to spend in the $10 million range than in the $1 million range.
"Right now there are some great buys in West Palm and all around Palm Beach County. People with a dream to buy here -- well, I don't think there will be a better time in our lifetime than now through next year to buy -- be it $200,000 condo or $20-million house."
And celebrity cache in these situation does little to help a sale.
"It greatly affected the promotion and PR for the house, but in terms of the actual sale price, the buyer doesn't care who it belongs to," says Cloninger. "A serious buyer looks at lot size and square footage. The property is worth what it is worth. Ricky Martin or Ricky Smith, the property will bring what it's going to bring."