I'm a Multimillionaire and I'll Never Buy a Mansion for 5 Reasons
Many of us dream of growing up, hitting it big and then buying an enormous house with at least one swimming pool. Well, that dream might not be for all of us.
We spoke to Joel K., a software engineer in the San Francisco Bay Area, who, although amassing a multimillion dollar net worth from his years at big tech companies, has opted for a modest two-bedroom apartment.
Here are five reasons why a millionaire didn't buy a mansion.
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1. Lower Maintenance and Utility Costs
"The costs of maintaining and heating/cooling a massive home were just impractical for me," said Joel. "My utilities, landscaper fees, repair costs, etc. are a fraction of what they'd be for a giant house and property."
He estimates his total housing expenses at around $33,000 per year currently. "For a multimillion-dollar mansion, I'd likely be paying nearly that much just in taxes, insurance and maintenance yearly. No thanks!"
2. Ability To Stay Central
A driving factor in Joel's real estate decision was staying in an urban, centrally-located area. "I didn't want to be isolated in some far-out suburb just to have excessive space I didn't need," he said. "Being walking distance to amenities is really important to me."
With a reasonable 1,200-square-foot apartment, Joel owns a simple but comfortable home base near top restaurants, nightlife, parks and his friends. "My quality of life wouldn't improve by trading that for a mansion out in the boonies," he added.
3. Minimizing Environmental Impact
As someone deeply passionate about sustainability, limiting his environmental footprint was a priority for Joel. "Going smaller on housing lets me drastically reduce my energy and water consumption, which is hugely important to me," he said.
Not only does he consume less power for heating, cooling and appliances, but his modest two-bedroom also didn't require clearing land and erecting a large, high-impact construction project. "I'm doing my part to preserve natural resources and open space by not building — and heating — an unnecessarily massive structure," Joel stated.
4. Protecting Liquid Assets
Even as a multimillionaire, tying up excessive money in an illiquid asset like real estate gave Joel pause. "I'd rather have the bulk of my net worth stay liquid and invested in income-producing assets instead of dumping it into an inflated property that doesn't generate cash flow."
He continued, "If I spent $5 million to $10 million on prime Bay Area real estate, not only are those millions stuck in an illiquid mansion, but there's also the ongoing carrying costs associated with that burden each year."
To Joel, it made more sense to keep his real estate holdings relatively minimal.
5. Future Flexibility
Looking ahead to potential retirement locations or living situations, Joel valued keeping his options open. "I don't know if this is true or not, but it just seems like it would be easier to move when you're in an apartment as opposed to a big house," he said. "I don't want to live here forever and I'll have to downsize eventually so why not start downsized?"
Joel loved the idea of just not accumulating that much stuff — he feels like it allows him more freedom now and in the future.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal, or tax advice.
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