Actor Johnny Depp usually makes headlines for blockbuster pirate movies or, occasionally, domestic strife, but lately he’s been in the news for some “extreme” real estate purchases. According to public record, the star recently filed a $25-million lawsuit in which he accused his former business managers of unsavory conduct, including fraud and mismanagement. Those business managers turned around and counter-sued Depp alleging, among other things, that a “lavish lifestyle” that included 14 recent real estate purchases that were, according to the lawsuit, “acquired, improved, and furnished” before resale. By that description, Depp might just be a really famous real estate investor.
Depp’s 14 purchases cost him, according to the lawsuit, more than $75 million to flip. Whether flipping is what he intended is really anyone’s guess at the moment, but he did sell them off after improvements in order to pay monthly bills that, allegedly, totaled more than $2 million. His former business managers complain that in effect, those real estate investments largely went toward paying the upkeep costs of Depp’s 150-foot luxury yacht.
At present, Depp still owns some of the 14 properties, including a 37-acre village in the south of France, which is presently listed and has undergone extensive restoration. The area is a highly exclusive one and the property was once listed for $25 million before the historic restorations took place. Depp also owns a series of private islands in the Bahamas and multiple penthouses in a building in downtown Los Angeles that the actor purchased in a block and is now selling off separately.
At the end of the day, it will be hard for anyone not intimately familiar with Depp to say whether he was just buying up properties left and right, as the people suing him suggest, or whether he was actually investing on a scale largely accessible only to the very rich and very famous. It certainly appears likely given the manner in which he has treated at least some of the purchases that he was expecting to profit on them. Whether you are buying $75-million worth of properties or looking for a good off-market deal for $75,000 or less, many of the basic premises involved in real estate investing remain the same:
- Make sure there’s a market for your deal when you’re done with it.
In the case of that French restoration property, Depp could be waiting a while if he wants to get a good return on his renovations and restorations. The market of able buyers for such a property is likely fairly small. On the other hand, it will likely be easier to move those properties in Los Angeles even though they are extremely expensive.
- Do the math on your monthly budget.
According to the lawsuit, Depp has to sell off properties to maintain his yacht. We have no way of knowing whether or not this is true or whether or not he planned it this way, but it does aptly demonstrate the importance of knowing how much money is flowing out of your budget each month and how that will affect your investing strategy. If you miscalculate, you could end up having to sell for less than you wanted to in order to sell faster than you had planned.
- Get a good team in place.
Regardless of who is right or wrong in these lawsuits, Depp clearly had a team in place managing his business whose beliefs and plans conflicted with his own. Make sure your real estate investing team is on the same page with you about your goals and strategies, and that they (and you) have a predetermined process for disagreeing with you about the viability of your plans in the event it is necessary for them to do so.
About the Author
Carole VanSickle Ellis is the editor-in-chief at Think Realty Magazine. Learn more about the publication and other member benefits at https://thinkrealty.com/membership/.