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When celebrity plastic surgeon Raj Kanodia started building his 34,000-square-foot mansion to flip for a profit, his real estate friends gave him a warning.
"They said, 'You're way out of your league,'" Kanodia recalled. "They told me, 'You'll run out of money and you'll be forced to sell it to service your debts.'"
Four years and well over $70 million later, Kanodia is feeling the weight of their advice.
The modern glass palace he built in Los Angeles' Bel Air neighborhood has been sitting on the market for more than a year. Rather than rolling in profits, Kanodia is now performing as many plastic surgeries as possible to fund millions of dollars in loans and the high costs of maintaining the empty house and grounds. After failing to find a buyer, he's now offering it for rent at $1.5 million a month and says he would consider offers of more than $120 million — marking a $60 million price cut.
"In Las Vegas, terms it's called 'all in,'" he said. "I'm all in times a million."
Kanodia has plenty of company. The high-end real estate market is suffering, with a glut of overbuilt and overpriced mansions in many of the country's most affluent ZIP codes. After the boom years of 2014 and 2015, developers and investors went on a massive building spree to create ever-larger and ever-more expensive homes. But now, with foreign buyers fading and tax changes making it more expensive to live in high-tax states, the legions of modern white spec-mansions are becoming the white elephants of the housing market.
Manhattan has seen six straight quarters of sales declines — the longest downturn in three decades, according to a report from Douglas Elliman and Miller Samuel. In posh Greenwich, Connecticut, prices for luxury homes fell 24% in the first quarter, while the number of listings surged 68%. Sales in the Hamptons in the first quarter were down 19%, with prices sliding and the number of listings almost doubling.
But Bel Air has become the capital of the luxury building boom, and Kanodia one of its most visible symbols.
Kanodia, whose scarless "closed rhinoplasty" nose jobs and artistry with fillers made him a favorite of stars like Kim Kardashian and Jennifer Aniston, has lived in a Mediterranean-style mansion in Bel Air for over 20 years. In 2011, he purchased the property next door for around $6.8 million and planned to build a modest home — perhaps for himself, or perhaps to sell.
But with every architect he met, the project grew in size and cost. What began as an around 3,000-square-foot home ballooned to a 34,000-square-foot megamansion with nine bedrooms, a Portuguese-limestone facade, a spa, theater, 2,000-bottle wine room, three kitchens and fully loaded gym designed by celebrity trainer Harley Pasternak. An avid gardener and horticulturalist, Kanodia flew in exotic plants and trees from India and festooned the grounds with rolling lawns and hanging gardens. Perched on a lush shelf, the home has one of the most prized views in LA, overlooking the mountains, ocean and the city.
Kanodia felt that his experience reshaping faces gave him a special insight into shaping homes.
"The house is built with the same millimeter precision of the beauty I like to create," he said. "I like to create beauty, it's a sense of euphoria for me."
But Kanodia's euphoria soon gave way to financial realities. Despite charging upwards $20,000 or more for his procedures, Kanodia had to scramble to find lenders or investors, at one point turning to what he calls "hard-money lenders." Eventually he got a loan from the Bank of Internet. While he declined to give the amount, he said he has plenty of equity in the house to pay off any loan.
"They have a huge LTV (loan-to-value) on this house," he said. "It's a big cushion."
Kanodia listed the house in 2018 for $180 million. While he had plenty of interested buyers, none was willing to pay his expected price. Los Angeles brokers say many local spec builders have little real estate experience but were drawn by the quick-and-easy profits of 2014 and 2015.
Now, with so many newly built spec homes on the market — many with nearly identical white-box designs by architect Paul McClean — buyers feel no urgency to make deals. Spec builders like Kanodia are sitting on massive properties with large loans and maintenance costs. A house next door, built by fashion magnate Bruce Makowsky, had been listed in 2017 for $250 million, but he's cut the price to $150 million.
"A lot of developers got caught up in the groundswell, the gold-rush mentality," said Ernie Carswell, a leading real estate broker in LA with Douglas Elliman. "They thought: Build the biggest, sell the biggest. Unfortunately they're going to sell at a sacrifice."
Kanodia, who came to the U.S. from India with next to nothing, is philosophical about the financial pressures. He said if he can't find the right buyer, he'll live in the house himself and sell his current home across the street, which he says could fetch over $20 million.
He said he may bring in an investor or "partner," who could help fund the house. And since he built a clinic on the lower floor, he can always work from home and do more procedures and injectibles to pay the bills.
"Whenever you take risks and chances in life, you have to ask, 'Am I making the right calculations?'" he said. "I don't know. I just go day to day. If the bubble bursts, ... I will accept whatever is there. For me to even live in this house for a day, it's a success."