(This is Part 3 of a three-part series. Read Part 1 and Part 2.)
Frank McKinney is building the most expensive spec house in the United States. Will he sell his house for more than the Trump estate?
Frank McKinney, sometimes called a modern day Robin Hood due to his philanthropy, claims that he “sells to the rich to give to the poor.” His foundation, The Caring House Project, provides shelter to the “world’s most desperately poor.” He attributes much of his success to the idea of “paying it forward.” The more you give to others, the more that comes back to you.
Like many other self-made men, he started with virtually nothing. He began his building career helping others make basic repairs to their homes. When he ventured out on his own, he took all the money that he and his wife had to buy a $50,000 fixer-upper. McKinney’s success strategy was simple: locate an undervalued fixer-upper, upgrade, and sell it for much more than you paid for it. In fact, McKinney says that if he were to start over again, he would go back to purchasing those fixer-uppers that launched his building career.
According to McKinney, there are two markets that are recession proof: first-time buyers and the ultrawealthy. For the typical real estate investor, the first-time-buyer market is the area in which to concentrate. There are always buyers who are eager to purchase their first home. While there are millions of potential first-time buyers, McKinney says that the market for his $20 million-plus homes is limited to about 50,000 people. If you’re marketing the most expensive house in the United States for $135 million, the pool of potential buyers may be less than 20,000. Currently, many of the potential buyers for McKinney’s property are foreign nationals. According to McKinney, the buyer of his property could just as easily be a Russian oil baron or a Saudi sheik. Both groups are currently active in today’s ultra-high-end market.
McKinney’s strategy in building for the ultra-high-end market begins with locating an extraordinary piece of oceanfront land. His current project is located within minutes from where Donald Trump is also building a $100 million-plus oceanfront property. An important part of marketing to this exclusive group of buyers is to make sure that the property is both unusual and unique. For example, McKinney has created a shark aquarium and a “James Bond” room, the latter of which he’s included in previous properties he’s built. He and his wife also search the world for unique pieces and materials to include in their homes. In one house they built, they used wood from a barn that was more than 100 years old. If they purchase an unusual marble, they will buy the entire lot and then destroy any they do not use. This way the buyer knows that they will never see their marble in another property. Fixtures must also be one of a kind. What’s more important than the uniqueness of the materials, however, is the story behind them. For example, if the doors to a particular room came from a European castle, what was the history of the castle? Who were the inhabitants? Who built it? What historical events took place there? Many buyers are willing to pay a premium to have a piece of something famous.
The market McKinney caters to wants the best of everything. His houses are completely furnished, right down to the 18-karat-gold toothbrushes. “My clients want to move in right now. They don’t want to take the time to shop for furniture. They are accustomed to getting what they want when they want it.”
In terms of the design, McKinney focuses on appealing to all five senses. For example, in one of his $20 million-plus homes, he included a state-of-the-art theater with the finest equipment available. To tap into the buyers’ sense of touch, the walls were covered in red velvet and the theater was furnished with reclining couches. McKinney tapped into both smell and taste by including a popcorn machine. The entire environment, including the lights, air conditioning and all theater equipment, was controlled from a single console.
When it comes to marketing his properties, nothing less than a full-stage Hollywood production will do. McKinney wants to make sure that the press and the entire luxury real estate community turns out for his bash. He may arrive in a hot air balloon dressed as a pirate and stage a battle. Pyrotechnics and special effects are part of his marketing cache.
Does McKinney’s approach work? He sold a $50 million house in just 50 days and a $16.9 million house in 62 days. It will be interesting to see who sells their luxury property for the most money: the “pirate” or “the Donald.”
Bernice Ross, national speaker and CEO of Realestatecoach.com, is the author of “Waging War on Real Estate’s Discounters” and “Who’s the Best Person to Sell My House?” Both are available online. She can be reached at bernice@realestatecoach.com or visit her blog at www.LuxuryClues.com.
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