Frank McKinney, sometimes called a modern day Robinhood due to his philanthropy, claims that he “sells to the rich to give to the poor.” His foundation 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.
On his website, McKinney describes himself as "The Daredevil Developer and Kinf of ready-made dream homes." He has some great suggestions for anyone who wants to work the luxury real estate market. Before getting into his suggestions, here's a little bit about his history and philosophy.
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 ultra wealthy. 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 dollar 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 estates 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 ocean front land. 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 as well as creating a “James Bond room” in previous properties he has 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 a wood from a barn that was over 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 tooth brushes. “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 dollar house in just 50 days and a $16.9 million house in 62 days.
Posted by Bernice Ross. This week at RealEstateCoachRadio.com we are pleased to welcome Hoss Pratt, the creator of the Listing Boss. Hoss did a great series for us calledPillars of Real Estate Success. that included "Go to Work on You," "Beef up your marketing arsenal," "System, systems, systems," "Secrets to Getting to the YES," and Create your perfect real estate day. "Best of all, he has agreed to share 20 of live prospecting videos and 20 of his live calls at no charge to our readers—now that’s a deal. The link is freelivecalls.com
Great post Bernice! always great to hear a different perspective real estate investors. Nice share.
Posted by: Danny Welsh | September 19, 2011 at 03:48 PM