The developer of a $75 million luxury estate in Paradise Valley is in default on loans he used to purchase the property on which he plans to build a 40,000-square-foot mansion.
Eureka, California-based Reprop Financial Mortgage Investors LLC issued two notices of foreclosure to David Hersh, founder of Scottsdale-based Wow Luxury Properties, according to public records.
One $4 million loan was used by Wow Luxury Properties to buy property at 5837 N. Palo Cristi Road, Paradise Valley, while the other $400,000 loan is for the property next door at 5815 N. Palo Cristi Road, Paradise Valley.
Hersch said he is confident he can work it out before the auction date, scheduled for July 25.
"I made a mistake calculating the way we refinance our loans," he told the Business Journal. "We've agreed to a new loan. It was me just being a little stubborn. I'm having to pay the price for my own mistake and it's gonna come out of our pockets. Nobody else's; just ours."
Either way, he said, the project will move forward.
"I'm gonna pay the price, but there's no way this project is in danger," Hersch said.
Scottsdale-based Cullum Homes — which is not an owner of the project — is set to begin construction within the next two or three weeks on 2.2 acres at 5815 N. Palo Cristi, Hersch said.
Rod Cullum, founder of Cullum Homes, said he spoke with Hersch and is confident the financial snafu is being handled.
The $75 million mansion boasts a basement that will include a bowling alley, indoor shooting range, golf simulator, casino room, recording studio and a movie theater with metaverse room.
Plans also call for a 2-story, 16,000-gallon aquarium that will draw light into the basement.
Also leading down to the basement is a car lift to a car collector's showroom. Above that showroom is a plexiglass ceiling where the homeowner can look down at the collection from the home office.
Outside will be a cinema pool with a waterfall and large movie screen, along with a lazy river, an island green for chipping and putting, a stage, fire pits with an outdoor fireplace, outdoor kitchens, and a slide.
"Based on current interest right now, somebody is going to buy it and build it," Hersch said. "We have two people in advanced discussions. I think it's quite likely that they buy the vision and slightly alter it to their needs."
Hersch said he's been marketing the custom home globally.
"For us, the buyer for this home doesn't live here," Hersch said. "This is somebody that's going to come to us from out of state or out of the country, which is where our marketing is. It's very important to us to be open to their creativity."
Hersch said he has a total of 4.6 acres that could be developed as a larger compound.
"Some of the compound buyers will see that work is underway and it gets exciting," he said.