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Early homeownership long has been part of the American dream. But in Los Angeles, Hollywood nepo babies are often buying more than a modest one-story ranch. “Think of them as a starter home,” says Paul Lester, a partner at The Agency. “But a starter home in some other community somewhere in the States is a lot different than what we’re talking about — it’s a starter home of $3 million to $4 million.”
Case in point: Don Henley purchased his 20-something son, Will, an eco-friendly, open-concept starter home in Mar Vista last year for $4.3 million. In April of this year, model Presley Gerber — the 23-year-old scion of Cindy Crawford and Rande Gerber — purchased a $3.4 million midcentury home in Beverly Hills.
And then there is Jordan McGraw, whose parents, Dr. Phil and Robin McGraw, reportedly gave him one hell of a present in 2020 — a $10 million mansion in Beverly Hills.
All across L.A., nepo babies are on a real estate buying spree. Some get the help of their famous families in making the purchases; others put down their own money.
“People of means buying houses for their children at an early age is not a new concept,” notes Douglas Elliman’s Josh Flagg, one of the stars of Million Dollar Listing Los Angeles. But, he adds, “With the increased wealth in the world today, it has become more normalized and less unique than it once was. I think that there is an entitlement aspect, which is a bit more prevalent than it was before, when parents pushed hard work over just buying houses for their children.”
Lester adds that wealthy clients increasingly see L.A. homes as a sure investment. “I do think that there is more of a focus on ownership of real estate in the second and third tier of families than perhaps there ever has been,” he says. “Families who already own legacy properties or have done well in real estate … want to see the family continue ownership in Los Angeles because it’s continued to be proven as a source of great investment.”
In an uncertain economy, real estate is also seen as a more secure way of holding on to wealth and generating income through renting or flipping. “When a family is affluent and has business acumen, they instill that in their children, and oftentimes this begins with a real estate acquisition,” says Tomer Fridman of The Fridman Group at Compass. “Many of my high-net-worth clients hold a substantial amount of wealth in real property, and their children start purchasing property early on.”
Though the trend is particularly visible in L.A., transferring wealth from generation to generation is reaching epic heights. As part of what economists are calling “the great wealth transfer,” rich, aging baby boomers are increasingly bequeathing money and property to their children and grandchildren, dubbed giving while living. According to the firm Cerulli and Associates, boomers in the top 1.5 percent of households will be passing down approximately $35.8 trillion in the next decade, many before their deaths.
Real estate agents also note that when scions buy property, they generally buy homes that are smaller than those of their parents but are similar in style (for example, Gerber’s modern home is reminiscent of his parents’ former midcentury manse in Beverly Hills). “The kind of architecture that’s owned by parents is often duplicated in the second generation,” Lester says. “For instance, if you’ve got a Neutra or it’s a Schindler, it’s very likely that the kids are looking for a similar thing.”
Of course, if the elder generation of a family buys homes for the younger generation, there sometimes are strings attached. As Lester notes, he recently helped a family who owns in L.A. buy a home in Malibu. “It was designated more as the kid’s house, but it gets used by everybody,” he says. “So it becomes a wealth-amassing portfolio, really. And that portfolio works for the whole family. There’s another family that I work with and they’re all excited because one of the kids has a new house that they’re building. And it’s nearby where Dad and Mom live. So, it’s like, ‘Oh, Dad’s going to come over and use the pool!’ ”
Brokers also note that some families patiently buy properties surrounding their main estate until they can create their own compounds, with some houses being occupied by the younger generation.
For many mega-rich parents, instructing their children in smart real estate investing is a way to teach them wealth management. “There’s a difference between buying a house for your child and handing them the keys versus letting them handle a project and giving them firsthand experience in the process,” says Flagg, adding that some homes will invariably appreciate more than others.
“There will be some investments that are better than others, which comes from the learning process,” continues Flagg. “I’ve sold houses over the years to friends of mine that started with a house when they were in their early 20s and now, in their mid-30s, they’re on the third house.”
Brandon Thomas Lee and Dylan Jagger Lee — the sons of Tommy Lee and Pamela Anderson — got the memo. Last year, the two sold a five-bedroom home in Malibu for $3 million, getting $1 million over what they paid for the property in 2018.
Other recent L.A. home purchasers include billionaire Len Blavatnik’s son Val, who bought a nearly $5 million house above the Sunset Strip in May, and Rob Lowe’s son (and Unstable co-star) John Owen Lowe, who acquired a $3.4 million spread in Sherman Oaks in February.
Many kids also follow their well-known real estate agent parents into the family business, like Farrah Aldjufrie and Alexia Umansky, who are part of family patriarch Mauricio Umansky’s team at The Agency and star with him on Netflix real estate reality series Buying Beverly Hills.
So, note to the rich kids of Los Angeles — instead of that graduation trip to Europe, maybe speak with your parents about the investment benefits of a not-so-humble starter home in the Hollywood Hills.
“If you are currently in a position to buy a home, townhome or condominium,” says agent Ron Smith of Smith & Berg Partners at Compass, “it will be far more meaningful and impactful to their future than leaving them an inheritance when they’re in their 50s or 60s.”
This story first appeared in the Sept. 6 issue of The Hollywood Reporter magazine. Click here to subscribe.
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