When million-dollar-plus homes are purchased, do people put more than 20% down?

[Anonymous]

Everyone we know with $1.5m+ homes paid cash entirely, including us. Our financial advisers know what they are doing.

Snarky people still try to gossip, but that is why they are bitter, because they will always be no more than a gossip.

[Anonymous]

I work in housing finance, and I would say that although it is not uncommon for people to pay cash for homes that 1.5m plus, it is also not the norm. I know a number of people that have taken out sizable mortgages when they could have paid cash because it was financially advantageous to do so. Hell, Mark Zuckerberg has a mortgage (http://www.bloomberg.com/news/2012-07-16/zuckerberg-s-loan-gives-new-meaning-to-the-1-mortgages.html), and we all know he could pay cash several times over.

Anonymous wrote:

Everyone we know with $1.5m+ homes paid cash entirely, including us. Our financial advisers know what they are doing.

Snarky people still try to gossip, but that is why they are bitter, because they will always be no more than a gossip.

[Anonymous]

+1 to this ... I am a financial adviser and people would be appalled at how little some of the HNW advisers know about investing and fiscal management. There is a huge chunk of the industry (might even be a majority) that comprises really good salespeople with really poor financial skills. More often than not, the advisers catering to the $1mm - $20mm accounts are not paying any attention to their clients' accounts at all, rather they delegate that work to kids out of college while the advisers themselves occupy their time getting new clients!

As PP below notes, if one can generate a better return than the borrowing cost on the mortgage, the only benefit to buying the house all cash is the peace of mind that comes with a low/no mortgage payment. That is of course valuable and smart investors know that 4.5% (average rate today) real is actually nothing to sniff at, but advisers don't 'know what they're doing' if they haven't walked through the pro/con tradeoffs of borrowing with their clients.

Anonymous wrote:I work in housing finance, and I would say that although it is not uncommon for people to pay cash for homes that 1.5m plus, it is also not the norm. I know a number of people that have taken out sizable mortgages when they could have paid cash because it was financially advantageous to do so. Hell, Mark Zuckerberg has a mortgage (http://www.bloomberg.com/news/2012-07-16/zuckerberg-s-loan-gives-new-meaning-to-the-1-mortgages.html), and we all know he could pay cash several times over.

Anonymous wrote:

Everyone we know with $1.5m+ homes paid cash entirely, including us. Our financial advisers know what they are doing.

Snarky people still try to gossip, but that is why they are bitter, because they will always be no more than a gossip.

[Anonymous]

I know my financial advisors qualifications and billable hours, maybe you do not.

High end financial advisors work differently than not so high end, which is what I suspect you are doing.

Old money knows how to manage their money, that is why it is called old money. But that term is "fighting' words" here; and I trust NOT how you make your money, PP who claims to be a "financial advisor".

But alas, I suspect you "know everything". Snicker.

[Anonymous]

Anonymous wrote:

Everyone we know with $1.5m+ homes paid cash entirely, including us. Our financial advisers know what they are doing.

Snarky people still try to gossip, but that is why they are bitter, because they will always be no more than a gossip.

I do not understand. Interest rates were at historic lows. If you happened to be in the market to buy at that time (and why not? the housing market was still stinky), it would make so much more sense to get a mortgage and park your money elsewhere.

The only reason paying cash for a house would be because it's not that much money anyway, just pennies to you.

What is your net worth?

I am not saying that paying cash for real estate is always bad, but you sound obnoxious and full of shit, actually.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Everyone we know with $1.5m+ homes paid cash entirely, including us. Our financial advisers know what they are doing.

Snarky people still try to gossip, but that is why they are bitter, because they will always be no more than a gossip.

I do not understand. Interest rates were at historic lows. If you happened to be in the market to buy at that time (and why not? the housing market was still stinky), it would make so much more sense to get a mortgage and park your money elsewhere.

The only reason paying cash for a house would be because it's not that much money anyway, just pennies to you.

What is your net worth?

I am not saying that paying cash for real estate is always bad, but you sound obnoxious and full of shit, actually.

Case in point. Some people know what they are doing, which is why they have money and you do not.

[Anonymous]

Anonymous wrote:

I know my financial advisors qualifications and billable hours, maybe you do not.

High end financial advisors work differently than not so high end, which is what I suspect you are doing.

Old money knows how to manage their money, that is why it is called old money. But that term is "fighting' words" here; and I trust NOT how you make your money, PP who claims to be a "financial advisor".

But alas, I suspect you "know everything". Snicker.

I'm the PP ... our average account is north of $100mm. You're probably right that we're not really talking about the same leagues. I'm sure your guy telling you to plow cash into a minimal real return asset has got it all worked out though.

[Anonymous]

If the old money PP is as well-to-do as s/he's implied, s/he wouldn't be paying the 4.5% average rate anyway ... most big banks would be falling all over themselves to offer sub-3% rates and probably something in the 2%s if there's a cross-service opportunity. Peace of mind to have no mortgage, but all that is is protecting the trust fund, certainly not adding to it (let alone adding to the real value). Inflation's a bitch though, so hopefully daddy left a big pile.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

I know my financial advisors qualifications and billable hours, maybe you do not.

High end financial advisors work differently than not so high end, which is what I suspect you are doing.

Old money knows how to manage their money, that is why it is called old money. But that term is "fighting' words" here; and I trust NOT how you make your money, PP who claims to be a "financial advisor".

But alas, I suspect you "know everything". Snicker.

I'm the PP ... our average account is north of $100mm. You're probably right that we're not really talking about the same leagues. I'm sure your guy telling you to plow cash into a minimal real return asset has got it all worked out though.

I highly doubt that. And I don't even know what you are talking about there.

I'm quite wealthy myself. Anyways, people with 9 digit NW don't buy an itty-bitty house all-cash and live in it unless they are 80 y.o. and have done so for decades or have mental/social problems. The normal ones buy $20 million-plus homes and...yup...get a mortgage most of the time. Because it's always better to use OPM.

Why are you pissing around with 1.5 with that supposed net worth? Snicker right back you.

[Anonymous]

Anonymous wrote:If the old money PP is as well-to-do as s/he's implied, s/he wouldn't be paying the 4.5% average rate anyway ... most big banks would be falling all over themselves to offer sub-3% rates and probably something in the 2%s if there's a cross-service opportunity. Peace of mind to have no mortgage, but all that is is protecting the trust fund, certainly not adding to it (let alone adding to the real value). Inflation's a bitch though, so hopefully daddy left a big pile.

I am the 21:09 PP. The other PP is full of shit. There is no reason not to get multiple mortgages in the 5-15 million range and invest in real estate that way, and free up your capital for other things.

Rich people have debt all over the place, but it's debt they can pay off if they want. It's just a way to keep moving money around. If the rates are low, grab that money while its there regardless of source!

I am definitely not old money (I am new as they come), but I have met a few and I can tell you, they don't sound like the PP. They usually have very nice homes as well and don't scrimp on that at all.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

I know my financial advisors qualifications and billable hours, maybe you do not.

High end financial advisors work differently than not so high end, which is what I suspect you are doing.

Old money knows how to manage their money, that is why it is called old money. But that term is "fighting' words" here; and I trust NOT how you make your money, PP who claims to be a "financial advisor".

But alas, I suspect you "know everything". Snicker.

I'm the PP ... our average account is north of $100mm. You're probably right that we're not really talking about the same leagues. I'm sure your guy telling you to plow cash into a minimal real return asset has got it all worked out though.

I highly doubt that. And I don't even know what you are talking about there.

I'm quite wealthy myself. Anyways, people with 9 digit NW don't buy an itty-bitty house all-cash and live in it unless they are 80 y.o. and have done so for decades or have mental/social problems. The normal ones buy $20 million-plus homes and...yup...get a mortgage most of the time. Because it's always better to use OPM.

Why are you pissing around with 1.5 with that supposed net worth? Snicker right back you.

Not exactly sure to whom you're responding (I think you're confusing my posts with the $1.5m "old money") ... I'm the one with clients whose accounts average >$100mm (at a global firm)... alas, I am not one of them and not even close. But you are completely right that people of true means often (likely more often than not) get a mortgage on their homes "Because it's always better to use OPM." - exactly right. And in my experience, even those with more $ than they'll ever need are still interested in making more ... ie, borrow cheap, invest at a higher rate, rinse, repeat.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

I know my financial advisors qualifications and billable hours, maybe you do not.

High end financial advisors work differently than not so high end, which is what I suspect you are doing.

Old money knows how to manage their money, that is why it is called old money. But that term is "fighting' words" here; and I trust NOT how you make your money, PP who claims to be a "financial advisor".

But alas, I suspect you "know everything". Snicker.

I'm the PP ... our average account is north of $100mm. You're probably right that we're not really talking about the same leagues. I'm sure your guy telling you to plow cash into a minimal real return asset has got it all worked out though.

I highly doubt that. And I don't even know what you are talking about there.

I'm quite wealthy myself. Anyways, people with 9 digit NW don't buy an itty-bitty house all-cash and live in it unless they are 80 y.o. and have done so for decades or have mental/social problems. The normal ones buy $20 million-plus homes and...yup...get a mortgage most of the time. Because it's always better to use OPM.

Why are you pissing around with 1.5 with that supposed net worth? Snicker right back you.

Not exactly sure to whom you're responding (I think you're confusing my posts with the $1.5m "old money") ... I'm the one with clients whose accounts average >$100mm (at a global firm)... alas, I am not one of them and not even close. But you are completely right that people of true means often (likely more often than not) get a mortgage on their homes "Because it's always better to use OPM." - exactly right. And in my experience, even those with more $ than they'll ever need are still interested in making more ... ie, borrow cheap, invest at a higher rate, rinse, repeat.

I'm sorry, you are right. I thought the 1.5 all-cash poster was posting again to herself. I asked about her net worth. I did wonder why that poster's self-aggrandizing garbled speak suddenly improved. I now understand your comment about a "minimal real return asset." Of course it's a big waste of money to buy the biggest house you can barely afford all-cash and promptly move into it. You are LITERALLY sitting on your money, and it's not working for you. That's not really the best investment.

I have multiple mortgages. I live in a much smaller house than I can afford. My investment properties are waaaaay too sexy for me to move in, so I rent them out to others.

I am not 9 digits myself. But then again, I am only 40. Maybe I will get there. I know lots of people whose wealth started to accelerate tremendously in growth during their 50's and 60's.

To go back to the OP's question, I paid the minimum down payment required for my home, which, as I recall, was 25% or something like that. But the rate was 3% or something like that, possibly lower--highway robbery!

[Anonymous]

Bought an $8 million home and paid $9 million in cash. Extra million was tip to real estate agent and for custom wall paper.

[Anonymous]

I paid cash.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Not always. We were planning to put 10% down but got a loan that allowed us to put 5% down. My husband was nervous that the economy was going to be such that we would not be getting raises in the near future so we decided to keep the money in cash. Later, as our house value appreciated, and we felt a bit more comfortable we were able to refinance both mortgages into a single 20 yr fixed and put in more of our cash. Of course this was only done b/c we had sufficient cash.

I don't understand your logic. Seems like you would want to put more down to keep the mortgage payments low. We wanted to put more down so that if we went down to one salary, we could still afford the mortgage. We were able to do about 50% down.

You're the illogical one. Real estate is a leveraged investment for a reason. Under pp's scenario, they kept their cash. Which do you think is more useful in the event of a job loss: Ready access to cash or a lower mortgage payment?

Who wants to lock up their cash in an illiquid investment like a house?