How do people afford 5 million + homes?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Own 2 homes, combined worth about $5.5M. How did we get there? Living below our means for many years, bought first home as one we could afford on only 1 salary (either of ours), and continued to save for retirement and life. Did not upgrade that home for 7+ years, until we relocated. Then bought a home for 50% of what "we could have".
Had that $500K+ home fully paid off by time we were 40.
But made the jump to $5M+ once we were able to cash in stock options. But without that we would still be at the $2M+ as affordable to us. Thru savings and living below our means and having a good salary to start with.

How much is that though?

Salary of $300-400K, with bonus possible up to 100% of salary (which typically is only 50% on average).

Key was in our 20s, we made 200K combined, and chose to buy a home of only $200K. Then we worked to save as much as possible. Soon after the combined salary went to $275K. We didn't take over the top fancy vacations, we drove a Nissan Sentra and a Honda Civic for 10+ years, when we could have easily afforded something newer, larger and much nicer.
So while that alone didn't get us to $5M homes, it was a strong start.
We also didn't have a dining room set or living room furniture in that $200K home (4 bed/2.5 bath typical family home). We didn't see the need to spend $4-5K to furnish those rooms that would hardly be used. so it was a mindset of not wasting $$$ and living comfortably but well below what you could easily afford.

Whereas, everyone else I knew bought a house based on both salaries (not 1) and then had to furnish it all with new stuff in first 3-4 months. They drove newer/bigger cars and everything else so many do to "keep up with the joneses".

So the answer is you earned a lot of money very young, that makes sense! Nothing to do with keeping up with the joneses really, more like living normally on a HUGE salary.

So wrong! Had we purchased the $450K home our agent told us we could afford, instead of the $200K one we did, that alone would be 2.5x the cost for the house we got (taxes, upkeep, mortgage, etc). Then add in if you furnish/fully decorate everything on a much bigger home (and we didn't do it for the "formal parts" of our home. So add in another $15-20K that would be spent.

Yes, we had good salaries. But a large part of the key is we DID NOT spend everything we made. We SAVED and invested. Just stated that we had similar friends who did spend and save very little in their 20s and early 30s. I know because we had similar jobs and I can compare our lifestyles.

So that 25-30K we saved (after investing well for retirement, some years it was more) becomes a lot over 25 years. Do that for 5-10 years and you'd be surprised what you have.

So yes, higher salaries have something to do with it. But not everything. Living so that you actually save a decent portion of your salary is how you get to the "next level". Life is about choices---you can spend it all or you can save and then spend it later on bigger purchases (like a home) if that's what you want to do.

It would have been fine if you bought for 450k because 1. you could VERY easily afford that mortgage on that salary 2. You would have made a massive profit on that home. Either choice was a great choice in order to accumulate wealth.

We sold the 200K home for 240K, 5 years later and put about 7K into it.
That same house sold for $440K, 23 years later---but those people replaced half the windows, new sliding door, new double front, new roof, new garage door, new fence and deck, put LVP on the first floor and new carpet on 2nd floor, all new bathrooms and new kitchen---just a few of the things I can see from the photos. I've done renovations recently. I'd say they spent 150-200K+ on the renovations and changes (outside of the new roof, which is maintenance).
So if I had taken that extra $200K and invested it. 28 years later I'd have $800K+ and choices with what to do with it, not tied up in a house. Whereas the previous owner owned for 23 years, and with the renovations, likely didn't make a profit, especially when you assume 5-6% realtor fee and transfer taxes.

So I'll take the good house, save the ridiculously high mortgage payment and invest instead.
FYI--the 200K home was a 2.2K sq ft 4 bed/2.5 bath home with a full basement on 1/3 acre in a decent school district (not outstanding---but mid level and we would have happily sent our kids there). You don't need more than that to live it.

[Anonymous]

Made about 1mm++ for a few years

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I love watching realtor shows like Million Dollar Listings, and it's mind blowing to me how so many people can afford those homes. If you can afford that, how did you get there?

Where do you get the idea that "so many people" can afford a $5 million home? Perhaps not even 0.1% of the population can.

Probably around the top 2-3% of households in the US.

https://www.bankrate.com/investing/income-wealth-top-1-percent/

I think you are grossly misinterpreting that article.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Own 2 homes, combined worth about $5.5M. How did we get there? Living below our means for many years, bought first home as one we could afford on only 1 salary (either of ours), and continued to save for retirement and life. Did not upgrade that home for 7+ years, until we relocated. Then bought a home for 50% of what "we could have".
Had that $500K+ home fully paid off by time we were 40.
But made the jump to $5M+ once we were able to cash in stock options. But without that we would still be at the $2M+ as affordable to us. Thru savings and living below our means and having a good salary to start with.

How much is that though?

Salary of $300-400K, with bonus possible up to 100% of salary (which typically is only 50% on average).

Key was in our 20s, we made 200K combined, and chose to buy a home of only $200K. Then we worked to save as much as possible. Soon after the combined salary went to $275K. We didn't take over the top fancy vacations, we drove a Nissan Sentra and a Honda Civic for 10+ years, when we could have easily afforded something newer, larger and much nicer.
So while that alone didn't get us to $5M homes, it was a strong start.
We also didn't have a dining room set or living room furniture in that $200K home (4 bed/2.5 bath typical family home). We didn't see the need to spend $4-5K to furnish those rooms that would hardly be used. so it was a mindset of not wasting $$$ and living comfortably but well below what you could easily afford.

Whereas, everyone else I knew bought a house based on both salaries (not 1) and then had to furnish it all with new stuff in first 3-4 months. They drove newer/bigger cars and everything else so many do to "keep up with the joneses".

So the answer is you earned a lot of money very young, that makes sense! Nothing to do with keeping up with the joneses really, more like living normally on a HUGE salary.

So wrong! Had we purchased the $450K home our agent told us we could afford, instead of the $200K one we did, that alone would be 2.5x the cost for the house we got (taxes, upkeep, mortgage, etc). Then add in if you furnish/fully decorate everything on a much bigger home (and we didn't do it for the "formal parts" of our home. So add in another $15-20K that would be spent.

Yes, we had good salaries. But a large part of the key is we DID NOT spend everything we made. We SAVED and invested. Just stated that we had similar friends who did spend and save very little in their 20s and early 30s. I know because we had similar jobs and I can compare our lifestyles.

So that 25-30K we saved (after investing well for retirement, some years it was more) becomes a lot over 25 years. Do that for 5-10 years and you'd be surprised what you have.

So yes, higher salaries have something to do with it. But not everything. Living so that you actually save a decent portion of your salary is how you get to the "next level". Life is about choices---you can spend it all or you can save and then spend it later on bigger purchases (like a home) if that's what you want to do.

Nice try, but still total BS.
You bought a 200k home, a couple of years later, the value doubles and it’s worth 400k.
Your friend decide to purchase a 450k home, a couple of years later, the value doubles and it’s worth 900k. A 450k profit or them versus a 200k profit for you.
Buying a home at the bottom of the pyramid is not the recipe for success.

We afford a 5m home because we purchased a 1.5m home decades ago and benefited from the appreciation.

[Anonymous]

Anonymous wrote:In my circle, everyone at that level started a business.

My kids attend a private school where it feels like most people own $4 million+ homes and many have $3 million+ vacation homes as well. The wealth can be staggering.

These families either make $1 million/year for many years or inherit a lot of money. There are tons of people like this around here. Many who make $20+ million/year.
how?
-finance
-equity/senior partners in big law
-business owners (tech, healthcare consulting, etc).
-C suite jobs at big companies.


There are also a ton of people floating around here who have inherited money. they work well-paid but not super well-paid jobs or maybe they don't work at all. They have a trust or received a lump sum of a few hundred million. It's not uncommon.

[Anonymous]

Don’t waste time watching fake reality tv programs.

We have a lot of money because we worked our asses off from ages 10-45 and never watched TV.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Own 2 homes, combined worth about $5.5M. How did we get there? Living below our means for many years, bought first home as one we could afford on only 1 salary (either of ours), and continued to save for retirement and life. Did not upgrade that home for 7+ years, until we relocated. Then bought a home for 50% of what "we could have".
Had that $500K+ home fully paid off by time we were 40.
But made the jump to $5M+ once we were able to cash in stock options. But without that we would still be at the $2M+ as affordable to us. Thru savings and living below our means and having a good salary to start with.

How much is that though?

Salary of $300-400K, with bonus possible up to 100% of salary (which typically is only 50% on average).

Key was in our 20s, we made 200K combined, and chose to buy a home of only $200K. Then we worked to save as much as possible. Soon after the combined salary went to $275K. We didn't take over the top fancy vacations, we drove a Nissan Sentra and a Honda Civic for 10+ years, when we could have easily afforded something newer, larger and much nicer.
So while that alone didn't get us to $5M homes, it was a strong start.
We also didn't have a dining room set or living room furniture in that $200K home (4 bed/2.5 bath typical family home). We didn't see the need to spend $4-5K to furnish those rooms that would hardly be used. so it was a mindset of not wasting $$$ and living comfortably but well below what you could easily afford.

Whereas, everyone else I knew bought a house based on both salaries (not 1) and then had to furnish it all with new stuff in first 3-4 months. They drove newer/bigger cars and everything else so many do to "keep up with the joneses".

This is such a bad argument that I think it must be fake? Nothing about the success you’re describing has to do with dining room tables or Volvos.

[Anonymous]

We have a $5 mil house because it was $1.8 mil when we bought it 20+ years ago in a desirable area. We could not have afforded that today. It seems like the younger people in our neighborhood that do, have family help, an HHI of $1 mil+, or a windfall like cashing in stock options or an inheritance, or a combination of several these.

[Anonymous]

You have to take risks in life to get there a we live in a cheaper (1.5m) house in one of Nock’s richer enclaves. We both work and have a hi of about $380k. We get to interact with a lot of people in 3-5m houses. If they aren’t from family money, or a partner at a law firm, they took a huge risk and quit their job and opened their own business in their field and then worked their tail off…and still do. But they took a risk.

[Anonymous]

^
Nova, not nock. Sorry.

[Anonymous]

Anonymous wrote:You have to take risks in life to get there a we live in a cheaper (1.5m) house in one of Nock’s richer enclaves. We both work and have a hi of about $380k. We get to interact with a lot of people in 3-5m houses. If they aren’t from family money, or a partner at a law firm, they took a huge risk and quit their job and opened their own business in their field and then worked their tail off…and still do. But they took a risk.

I think you raise an interesting point. It's a lot harder to take risks as well when not coming from money and lacking a safety net.

[Anonymous]

Anonymous wrote:I love watching realtor shows like Million Dollar Listings, and it's mind blowing to me how so many people can afford those homes. If you can afford that, how did you get there?

We got lucky with tech stocks. Very lucky.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Own 2 homes, combined worth about $5.5M. How did we get there? Living below our means for many years, bought first home as one we could afford on only 1 salary (either of ours), and continued to save for retirement and life. Did not upgrade that home for 7+ years, until we relocated. Then bought a home for 50% of what "we could have".
Had that $500K+ home fully paid off by time we were 40.
But made the jump to $5M+ once we were able to cash in stock options. But without that we would still be at the $2M+ as affordable to us. Thru savings and living below our means and having a good salary to start with.

How much is that though?

Salary of $300-400K, with bonus possible up to 100% of salary (which typically is only 50% on average).

Key was in our 20s, we made 200K combined, and chose to buy a home of only $200K. Then we worked to save as much as possible. Soon after the combined salary went to $275K. We didn't take over the top fancy vacations, we drove a Nissan Sentra and a Honda Civic for 10+ years, when we could have easily afforded something newer, larger and much nicer.
So while that alone didn't get us to $5M homes, it was a strong start.
We also didn't have a dining room set or living room furniture in that $200K home (4 bed/2.5 bath typical family home). We didn't see the need to spend $4-5K to furnish those rooms that would hardly be used. so it was a mindset of not wasting $$$ and living comfortably but well below what you could easily afford.

Whereas, everyone else I knew bought a house based on both salaries (not 1) and then had to furnish it all with new stuff in first 3-4 months. They drove newer/bigger cars and everything else so many do to "keep up with the joneses".

LOL. Frugality doesn't get you a $5 million house; millions in stocks options/grants does. This post is so out of touch and so arrogant.

I also laughed out loud. "Living below our means for many years" yadda yadda yadda "cashed in our stock options."

[Anonymous]

We have two homes worth a total of $10 million which is pretty crazy. No mortgages. We were always very aggressive savers and lived below our means right up until retirement when we built our second home for about $5 million and now it’s worth $8-9. My husband had a very big job that came with a lot of stock if the company performed well and it did. Right through our 50s many of our friends had nicer homes, cars, whatever but we were very happy with the lives we lived. For some people a big home is a high percent of their net worth. It never was for us and is still below 20%.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Own 2 homes, combined worth about $5.5M. How did we get there? Living below our means for many years, bought first home as one we could afford on only 1 salary (either of ours), and continued to save for retirement and life. Did not upgrade that home for 7+ years, until we relocated. Then bought a home for 50% of what "we could have".
Had that $500K+ home fully paid off by time we were 40.
But made the jump to $5M+ once we were able to cash in stock options. But without that we would still be at the $2M+ as affordable to us. Thru savings and living below our means and having a good salary to start with.

How much is that though?

Salary of $300-400K, with bonus possible up to 100% of salary (which typically is only 50% on average).

Key was in our 20s, we made 200K combined, and chose to buy a home of only $200K. Then we worked to save as much as possible. Soon after the combined salary went to $275K. We didn't take over the top fancy vacations, we drove a Nissan Sentra and a Honda Civic for 10+ years, when we could have easily afforded something newer, larger and much nicer.
So while that alone didn't get us to $5M homes, it was a strong start.
We also didn't have a dining room set or living room furniture in that $200K home (4 bed/2.5 bath typical family home). We didn't see the need to spend $4-5K to furnish those rooms that would hardly be used. so it was a mindset of not wasting $$$ and living comfortably but well below what you could easily afford.

Whereas, everyone else I knew bought a house based on both salaries (not 1) and then had to furnish it all with new stuff in first 3-4 months. They drove newer/bigger cars and everything else so many do to "keep up with the joneses".

LOL. Frugality doesn't get you a $5 million house; millions in stocks options/grants does. This post is so out of touch and so arrogant.

I also laughed out loud. "Living below our means for many years" yadda yadda yadda "cashed in our stock options."

For a while New York Magazine would have a finance focused article that sometimes was people giving "tips" on how they say paid off their student debt or got a down payment together for a house. Inevitably it was some version of "well I started saving from my first job at 16....thankfully my husband works in finance so he paid off my outstanding student loan" or "my new job meant I could afford the mortgage, and I am lucky enough to have my parents put down the 40% down payment for me..."