Tarek and Christina El Moussa may be the stars of "Flip or Flop," but their own home, which just hit the market, could sell at a half-million-dollar loss—if they're lucky.
Given they're pro house flippers, how can this be?
For starters, their divorce (finalized in January) sure didn't give the property (purchased in 2013) much time to appreciate. And now that Tarek is kicking back in his new bachelor pad in Costa Mesa, CA, it looks like Christina wants to move on, too. Although she's continued living in their family home in Yorba Linda with their two kids (Taylor, 7, and Brayden, 2), she just listed the five-bedroom, 8.5-bath Mediterranean mansion with Dean Lueck of First Team/Christies International Real Estate, where Christina now works. (The two will continue to star on "Flip or Flop," with the newest season slated to air this summer.)
Realtor.com records show that the El Moussas purchased the 6,366-square-foot house for $2 million. So, a near-million-dollar price hike seems like a fantastic profit, right?
Not when you factor in all of their renovations. As soon as Christina stepped inside, she reportedly wanted to change everything. So, the couple poured an additional $1.5 million into overhauling the place over two years' time, a saga that involved a three-month stay at a hotel and one-month stint with Christina's parents.
“We thought it would take about six months to finish our house, and it actually took two years,” Tarek told People. “We actually kind of remodeled our home twice. The first remodel was about 25% in, and it was a totally different look—it was more browns, beige, more of a rustic look.”
But then Christina had a change of heart.
“As it started I was, like, ‘I just love gray, black, and white, and I really want to move forward with that look,'” she told People. “So we just ended up clearing everything out and starting fresh.”
Changing course in the middle of renovations? As any "Flip or Flop" fan knows, that can kill a home's potential as a profitable investment.
Still, though: Flipping is their business and this was their own home, so apparently the same cardinal rules didn't apply.
Sure, in the end, the place looks amazing: Post-renovation, the 0.44-acre property sports an 800-square-foot pool pavilion, outdoor kitchen, spa with waterfalls, grotto, fire pit and putting green. Inside, there's a two-story dining room, a kitchen decked out with Carrara marble and Thermador appliances, and master suite with its own fireplace, soaking tub, and glass shower. They even sacrificed two bedrooms to create a gym.
Tarek once described this place as “the house we’ve been dreaming of our entire lives together.” Still, even if this home was a labor of love, it's never wise to lose sight of the fact that a house is an investment. And right now, if you crunch the numbers, this home's profit margin is already gone.
Did Tarek and Christina El Moussa send money down the drain?
"Bought for $2 million, $1.5 million in renovations, and selling it for $3 million? That's a $500,000 loss," says California real estate developer Tyler Drew. Plus, built in 2004, "this house is relatively new construction. Dumping $1.5 million into a house that is less than 20 years old is never going to turn out well."
Adding insult to injury? "It's gaudy, over-renovated, and backing up next to a hill that catches on fire every five years," Drew continues. "It's also a cool million dollars overpriced for comparable properties. This is a flop, hands down."
While not everyone has such a harsh assessment, many do think that those lovingly planned renovations might be overboard.
"It’s a beautiful home and the updates are impeccable," says Amethyst Albert, a real estate agent in Fort Bragg, NC. And yet, "with all the high-end finishes in a home they originally intended to stay in for many years, they probably stood to make a much larger profit margin if they had scaled back the luxury items."
In other words, this house might be too nice— and that might make buyers leery.
"The biggest concern for the next buyer would be if they are paying at the top of the market for this area, as everything has been done to the home that you could possibly do," agrees Florida real estate agent Cara Ameer. "Where could the price potentially go from here? That's always the risk with buying a home that has been extremely well-appointed and then some."
Let this be a lesson to all who have grand plans to renovate up the wazoo: Watch out. While not all couples will end up divorced, plenty of things can derail your plans to remain in your "dream home" forever. In fact, some experts theorize that the El Moussas' epic renovation may have helped do this couple in.
"Often couples will approach me stating they want to do a major renovation. My first question is not where or how much, but how is your marriage?" says Bruce Ailion, a real estate agentand attorney in Atlanta.
"This question is greeted with surprise. I explain that a major renovation is a very stressful process, and if you do not have a very strong relationship, the cost may include your marriage," Ailion explains. "It definitely causes people to pause before making the decision to go forward. When they do, I provide the name of a great psychologist in case problems arise. I’ve even given some thought to offering two to three hours with a psychologist as part of any significant real estate transaction."