If I were Filthy Rich
By nothankyounotnow+33 How much house, theoretically, to buy?
Without venturing into MC Hammer territory (dude went bankrupt after spending all his money on a mansion, or so the story goes), what are the rules for windfall lottery money in relation to housing?
Same as always, no more than 30% of income? Or does this threshold change once we get into the tens of millions? What would being "house poor" even look like for the uber wealthy?
EDIT: I do not care at all about what you would buy specifically, or where. I'm solely interested in the financial rationale behind how to make a right size purchase.
Recent responses
+28 @Fabulous_Hat7460 small house, deep in the wood, with a nice sized lake.
+27 @marvelguy1975 What causes folks to go broke is bascly their spending habits and the inability to actually budget their money. This goes for someone who wins 10 million dollars, 100 million or 800 million. As for your actual house question. It's all about the upkeep. Just some things to consider when you buy a multi million dollar estate. 1. Housekeeping, maids, cooks 2. Taxes 3. Land scaping, grounds keepers. 4. Repairs 5. Furniture 6. Electric/gas You can clear 100 million after taxes, buy a 10 million dollar home, but it costs 500k a year to run it? Look i honestly don't know. But it is true, more money can create more problems. Especially if you jump into a huge mansion. Mc hammer went broke because he put everyone he knew on the payroll. Plus I'm sure he handed out quite a few handshake deal loans that never got paid back. On top of the lavish lifestyle of course. He only had a few hits, but he was living like a guy who expected to make hits forever...well that didn't work out for him.
+16 @duxking45 Honestly if I won the 100 million plus my house would still be under a million I have pretty simple taste.
+13 @None There is no "rule" and I don't care what reddit thinks of me, so i wouldn't be consulting reddit. I would buy a gorgeous spanish colonial home, sprawling, large and beautiful.
+12 @Roonil-B_Wazlib There are a lot of factors at play at that level of wealth and house. One of the estates for sale in my state allegedly requires a staff of 7 to maintain, and has an estimated $2 million annual operating budget (staff included). If it ($26M) were to be 30% of your take-home jackpot, you’d need to your after-tax lump sum jackpot to be $87M. That’d leave you $61M. A 4% withdraw rate would mean your annual budget would be $2.4M before taxes. That would make you house poor. At the same time, a different $26M place might have that purchase price due to location, and have relatively low operating expenses. Being that I would want multiple properties, I don’t think I’d want any one property to exceed 10% of my after-tax lump sum, total real estate to represent less than 20% of my net worth, and probably no more than 20% of my annual budget in operating expenses across the properties. I’m willing to accept higher operating costs because I’d like a family compound with multiple houses, as well as some equestrian facilities. Having an after-tax lump sum of $60m would be wildly different than $300m.