How rich are people who buy 3 million dollar houses

[Anonymous]

Anonymous wrote:What's the typical income/net worth for this demographic? Is anyone making under 7 figures or having a net worth below 10 million?

There may be, but not us. The carrying costs are significant in terms of interest, taxes, maintenance, upkeep, and utilities. Even if there is no mortgage, the opportunity cost of having $3M of equity just sitting there is very high.

I would say factoring all of the above, a $3M home may have about a 150-200k annual effective cost. Unless you are making 7 figures, that kind of housing cost is just excessive.

[Anonymous]

Anonymous wrote:

Anonymous wrote:What's the typical income/net worth for this demographic? Is anyone making under 7 figures or having a net worth below 10 million?

There may be, but not us. The carrying costs are significant in terms of interest, taxes, maintenance, upkeep, and utilities. Even if there is no mortgage, the opportunity cost of having $3M of equity just sitting there is very high.

I would say factoring all of the above, a $3M home may have about a 150-200k annual effective cost. Unless you are making 7 figures, that kind of housing cost is just excessive.

hmmm... what if that $3M equity becomes $5M or $6M in 7-8 years?
And your estimate on the effective cost is way off. A $3M house here is new or newer, so there is minimal maintenance and utilities are also low due to the new building standards.

[Anonymous]

$700-800k HHI
Lots of equity

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:What's the typical income/net worth for this demographic? Is anyone making under 7 figures or having a net worth below 10 million?

There may be, but not us. The carrying costs are significant in terms of interest, taxes, maintenance, upkeep, and utilities. Even if there is no mortgage, the opportunity cost of having $3M of equity just sitting there is very high.

I would say factoring all of the above, a $3M home may have about a 150-200k annual effective cost. Unless you are making 7 figures, that kind of housing cost is just excessive.

hmmm... what if that $3M equity becomes $5M or $6M in 7-8 years?
And your estimate on the effective cost is way off. A $3M house here is new or newer, so there is minimal maintenance and utilities are also low due to the new building standards.

I'm not sure if a $3M home would become $5M or $6M in such a short period of time. It can happen on a one-off basis, I guess, but traditionally, the appreciation of homes in this price range does not work like this. Your typical $3M home already is in a very nice neighborhood, is of a certain size, and built to a certain quality standard. Generally speaking, unless significant renovation or improvement is done to a home, the value would not increase significantly. I mean you can take a look at the current 5-6 million dollar homes in the area and see what their prices were 7-8 years ago. There is a $4M home on the market down the road and it was sold 7 years ago for $3.5M. Another one nearby is selling for $5.5M, and it sold 10 years ago for, $5M. These are anecdotal, of course but they match what I've seen in general browsing for homes in the area.

My estimate on effective cost is factoring in either mortgage interest or opportunity cost on about 2M. I place this cost at about 5% a year, or about $100k. Taxes will be over 30k, and another 20k for everything else is rather conservative.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:What's the typical income/net worth for this demographic? Is anyone making under 7 figures or having a net worth below 10 million?

There may be, but not us. The carrying costs are significant in terms of interest, taxes, maintenance, upkeep, and utilities. Even if there is no mortgage, the opportunity cost of having $3M of equity just sitting there is very high.

I would say factoring all of the above, a $3M home may have about a 150-200k annual effective cost. Unless you are making 7 figures, that kind of housing cost is just excessive.

hmmm... what if that $3M equity becomes $5M or $6M in 7-8 years?
And your estimate on the effective cost is way off. A $3M house here is new or newer, so there is minimal maintenance and utilities are also low due to the new building standards.

I'm not sure if a $3M home would become $5M or $6M in such a short period of time. It can happen on a one-off basis, I guess, but traditionally, the appreciation of homes in this price range does not work like this. Your typical $3M home already is in a very nice neighborhood, is of a certain size, and built to a certain quality standard. Generally speaking, unless significant renovation or improvement is done to a home, the value would not increase significantly. I mean you can take a look at the current 5-6 million dollar homes in the area and see what their prices were 7-8 years ago. There is a $4M home on the market down the road and it was sold 7 years ago for $3.5M. Another one nearby is selling for $5.5M, and it sold 10 years ago for, $5M. These are anecdotal, of course but they match what I've seen in general browsing for homes in the area.

My estimate on effective cost is factoring in either mortgage interest or opportunity cost on about 2M. I place this cost at about 5% a year, or about $100k. Taxes will be over 30k, and another 20k for everything else is rather conservative.

We have a 7000 sqft on 2/3 of an acre we purchased at just under $2M a couple of years ago. It costs a lot to run a house this size, and even more for a larger house. It’s not the utilities that are expensive, it’s

Maintaining Landscaping
Weekly housecleaning
Other maintenance (power washing sidewalks, outdoor lighting, window washing, gutter cleaning)
And things break even in newer houses. And a larger house means more things to break. We have two refrigerators, a freezer, and ice machine, two water heaters, two laundry rooms, two furnaces, a generator, etc, etc. We have contracts with lots of folks to maintain everything.

Honestly, we conservatively spend $50k per year on maintenance. And it would be stupid to not take care of a $2M investment, but it’s definitely a luxury to have this much space.

[Anonymous]

Anonymous wrote:We started looking at $3M homes after crossing $15M NW. Truthfully, I couldn’t wrap my head around the holding costs … heating a 7,000 sqft house, maintenance, and the enormous property tax bill. Seems like we can “fix” our current much cheaper house with a $500,000 extension. I know that seems silly given our NW, but it just seems like so much waste. Income is about $750K fyi.

I agree. There's a psychological barrier there. Personally, it seems wasteful, but then we're introverts who don't socialize much. It would certainly make more sense for families who entertain a lot, or people who must host to optimize their career path.

[Anonymous]

Just bought $5m home. Close in december. Need to sell our $2.5m home.
Both parents work.
HHI - $3.5M. NW - $20M+
We will get a mortgage for 2.5 since we didn't have one for the other house we are now selling.
Own a 2nd home outright with no mortgage.
We don't include homes in our net worth calculations.

[Anonymous]

DH was a fed making 110k and I was a SAHM when we bought our home for 3.25M. My parents were happy to help

[Anonymous]

Anonymous wrote:DH was a fed making 110k and I was a SAHM when we bought our home for 3.25M. My parents were happy to help

Beautiful story.

[Anonymous]

Anonymous wrote:DH was a fed making 110k and I was a SAHM when we bought our home for 3.25M. My parents were happy to help

So you are poor.

[Anonymous]

At $10m net worth I looked at $3m houses but was not confident enough to buy one.

NW went from $10m to $30m over a few years and I finally pulled the trigger on a house around $3.5m on 1-2 acres of land.

I'm constantly amazed by how expensive the upkeep and maintenance of the house is. It's probably $100k/year before I touch property taxes or mortgage. I'd be just as happy in a full service condo but kids love the extra indoors and outdoors space so the house is really for them.

[Anonymous]

Anonymous wrote:At $10m net worth I looked at $3m houses but was not confident enough to buy one.

NW went from $10m to $30m over a few years and I finally pulled the trigger on a house around $3.5m on 1-2 acres of land.

I'm constantly amazed by how expensive the upkeep and maintenance of the house is. It's probably $100k/year before I touch property taxes or mortgage. I'd be just as happy in a full service condo but kids love the extra indoors and outdoors space so the house is really for them.

You're lying. There is no way what you said is remotely true. I own a $3.5M house. No way the cost is anywhere close to $100k/ year before taxes and mortgage.
If you are really worth $30M, you're not supposed to be this ignorant.

[Anonymous]

Anonymous wrote:

Anonymous wrote:At $10m net worth I looked at $3m houses but was not confident enough to buy one.

NW went from $10m to $30m over a few years and I finally pulled the trigger on a house around $3.5m on 1-2 acres of land.

I'm constantly amazed by how expensive the upkeep and maintenance of the house is. It's probably $100k/year before I touch property taxes or mortgage. I'd be just as happy in a full service condo but kids love the extra indoors and outdoors space so the house is really for them.

You're lying. There is no way what you said is remotely true. I own a $3.5M house. No way the cost is anywhere close to $100k/ year before taxes and mortgage.
If you are really worth $30M, you're not supposed to be this ignorant.

Insurance $2k/mo
Landscaping $1.5k/mo
Utilities $1.5k/mo (less in summer, more in winter)
Pool maintenance incl. winterization and refill $10k/yr

That's $70k/yr between those, and it feels like every other month there's a random bill for a couple thousand dollars. This doesn't include deferred maintenance like a new roof or HVAC. If I'm doing something wrong, please let me know as I'd love to pay less.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:At $10m net worth I looked at $3m houses but was not confident enough to buy one.

NW went from $10m to $30m over a few years and I finally pulled the trigger on a house around $3.5m on 1-2 acres of land.

I'm constantly amazed by how expensive the upkeep and maintenance of the house is. It's probably $100k/year before I touch property taxes or mortgage. I'd be just as happy in a full service condo but kids love the extra indoors and outdoors space so the house is really for them.

You're lying. There is no way what you said is remotely true. I own a $3.5M house. No way the cost is anywhere close to $100k/ year before taxes and mortgage.
If you are really worth $30M, you're not supposed to be this ignorant.

Insurance $2k/mo
Landscaping $1.5k/mo
Utilities $1.5k/mo (less in summer, more in winter)
Pool maintenance incl. winterization and refill $10k/yr

That's $70k/yr between those, and it feels like every other month there's a random bill for a couple thousand dollars. This doesn't include deferred maintenance like a new roof or HVAC. If I'm doing something wrong, please let me know as I'd love to pay less.

See? This is why you’re lying because you have no idea how much big houses cost.
My insurance cost is 2.2k per YEAR, with replacement coverage of more than 2.5M.
My utility is on average less than 300 per month, and I have 10,000sqft.
See how ridiculous you sound?

[Anonymous]

We bought a house a bit over $3M about 10 years ago. Income was variable. I had earned just under a million several years in a row but I had 4 years earlier was $500k+. Net worth was maybe $6M at the time. The initial plan was to rent the basement apartment and if things got too tight I’d sell some other real estate I had. We put down $1M. I was extremely confident that my income would rise

10 years later my income skyrocketed and so did house value (we also put $1.M cash into it). The property is worth $7.5M today.

Bottom line I don’t think either of the requirements are necessary but you would need someone on the right trajectory.