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Old 02-26-2011, 12:00 PM
 
Location: Wisconsin
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Not to go way off topic, but I assume there additional headaches involved with owning such a valuable home? Obviously property taxes would typical be quite high, but I wonder if there are other factors beyond that. Just curious more than anything.

I would think that with how even uber-rich properties have fluctuated in value over the past few years, the advice on the down payment in this thread would be well heeded.
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Old 02-26-2011, 12:31 PM
 
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Honestly, the short answer is "not so much" -- I mean probably 90% of the properties in the Chicago region that sell for over $1M are basically a bit larger / better finished than houses right up the block that are 30% less costly.

That automatically makes property taxes a lot higher, but even then, on a square ft. basis / value analysis if the rest of ones costs are not crazy having $1600 or more in property taxes is not the end of the world...
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Old 02-28-2011, 12:47 AM
 
Location: Albuquerque
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Quote:
Originally Posted by MaseMan
... additional headaches involved with owning such a valuable home?
chet everett uses an example of a million-dollar Chicago home.

Such a house would not seem particularly large to a person in Denver or Dallas.

A million-dollar home in Denver or Dallas would be large.
If in the suburbs, it could be 6,000-7,000 sq ft.

When I lived in Phoenix, I approached $200 to cool my 2,650 sq ft home in July.
However, it was not uncommon for people to spend $500 for that month for such a house.
Therefore, it might be possible to have a $1,000 cooling bill or $1,000 heating bill.

ObScrewThat: Screw that!

Other stuff like landscaping, painting, would be like a 'normal house' on steroids.

I can imagine that someone with a really high-paying job might need the "image"
that living in a large/expensive house like that would bring. People that buy a house
like that just because they think they deserve it probably tend to be whacked.
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Old 02-28-2011, 08:43 AM
 
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Upkeep on an expensive house is proportionally more expensive. Taxes, insurance, heating/cooling, furnishing such a house, etc...cost more than a smaller, less expensive home.

Whether someone can "afford" such a house on $300K or so really depends on their other expenses, and the general lifestyle they live as much as it depends on income.

Some people making $300K drive expensive cars and replace them every 2 years and always have car payments. Other people making $300K a year drive modest cars, pay cash for them and keep them for 5-10 years at a time.

Some people making $300K a year have been earning at that level for many years and have had the opportunity to put away money for years. Others have had less time at that level and thus have had little time to put away money.

Some people making $300K a year have equity in other properties when they buy a more expensive home. Others do not.
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Old 03-01-2011, 06:59 PM
 
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Quote:
Originally Posted by Momma_bear View Post
Upkeep on an expensive house is proportionally more expensive. Taxes, insurance, heating/cooling, furnishing such a house, etc...cost more than a smaller, less expensive home.

Whether someone can "afford" such a house on $300K or so really depends on their other expenses, and the general lifestyle they live as much as it depends on income.

Some people making $300K drive expensive cars and replace them every 2 years and always have car payments. Other people making $300K a year drive modest cars, pay cash for them and keep them for 5-10 years at a time.

Some people making $300K a year have been earning at that level for many years and have had the opportunity to put away money for years. Others have had less time at that level and thus have had little time to put away money.

Some people making $300K a year have equity in other properties when they buy a more expensive home. Others do not.
Totally agree!.

It's not what you make, it's what you keep when you make $300K and up and try to buy a million dollar home.

Was down in the Florida Keys fishing this past weekend and all of us (successful guys in our mid to late 30s making $250K and up). We wonder were our other buddy was cause he didn't make the trip. Turns out he's financially strapped and we all know he makes over $300K plus and has that 1 million dollar home. His mortgage/housing expenses has to ben around $6000-7000 a month. For someone making $25/30K a month that shouldn't be an issue. But the guy has 3 cars (yes 3 cars for a single person and we aren't talking Ford Focus cars). We are talking Mercedes, Porsche and BMW. He keeps on buying and selling cars (obviously for a loss). He takes terribly expensive trips all around the world. He doesn't even have more than $10K in his retirement account.

My other friend has a 1.3 million dollar home (with a $300K downpayment). Well he hasn't generated income in 6 months and is simply bleeding money. He is almost like my other friend. No retirement, no emergency savings etc.

So the answer to the question about how much income one needs for a million dollar home: a lot more complicated than one can imagine.

Me personally, I can afford a 1.5 million dollar home but no way I will push having $10K plus in just month housing expenses (even with 20% downpayment).

I like having spare cash sitting around. I like my housing payments less than 10% of my monthly income. It's just piece of mind.

Just remember high earners for those million dollar home are defaulting en mass when they lose their job or their small business goes under.
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Old 03-02-2011, 03:43 AM
 
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My wife and I pull about $350-400K (gross) and we aren't looking to buy anything beyond $850,000. A million or 1.5 would be just nuts.

We like to be comfortable with the payments.

In my mind, to do 1.5 million comfortably - you need to pull about $600 to 700K (gross).
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Old 03-02-2011, 10:18 AM
 
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Quote:
Originally Posted by pinipig523 View Post
My wife and I pull about $350-400K (gross) and we aren't looking to buy anything beyond $850,000. A million or 1.5 would be just nuts.

We like to be comfortable with the payments.

In my mind, to do 1.5 million comfortably - you need to pull about $600 to 700K (gross).
Not if you put down enough cash and you don't have other debts.
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Old 03-02-2011, 11:28 AM
 
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Default Have to disagreee...

Quote:
Originally Posted by pinipig523 View Post
My wife and I pull about $350-400K (gross) and we aren't looking to buy anything beyond $850,000. A million or 1.5 would be just nuts.

We like to be comfortable with the payments.

In my mind, to do 1.5 million comfortably - you need to pull about $600 to 700K (gross).
Honestly there are just a TINY number of households with incomes even a fraction of what pinipig what consider "comfortably" being able to afford home of over $1.5M --
Highest-income places in the United States - Wikipedia, the free encyclopedia

The estimate is so out sized it might as well be a playground conversation about "gazillionaires".

The facts are that many many people make the altogether rational decision to purchase a pricey home because they believe such an expenditure is a sane use of their assets despite their income being far more "ordinary" while others choose to use their income for other things.

I am routinely shocked to find out just how modest an income many business owners truly have. Of course in more than a few case the value of their "business expenses" are disproportionate to their "salary" and one suspects that their "household income" is shaped by the tick boxes on the census and NOT their accounting firm's interpretation of income: SEC Watch: Apple’s Profits Ballooned In 2010; So Did Jobs’ Compensation | paidContent
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Old 03-02-2011, 11:52 PM
 
Location: Living on the Coast in Oxnard CA
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I think if I was making $250,000 I would not buy a home over $500,000. I like having money in my pocket, retirement investments funded, and being able to spend time enjoying my home. We make over $100,000 and live in a $310,000 home that we love I may add. I am thinking I would still love it even if I was making $250,000 or more.

In Oxnard, CA a $1,000,000 home would get you a 3 story 5,000 square foot place on the beech, not Ocean front but still at the beach and with no back or front yard.
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Old 03-04-2011, 08:53 PM
 
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The land values make a huge difference. In the DC area, tiny plots of land (land only, not counting the house) in nice neighborhoods close-in are at the minimum $450K (largely because the commutes are horrible here). A million dollar house is a very modest house in these neighborhoods, likely to be 2200 square feet or less, many without garages or luxury updates, or other things considered necessities in most metro areas. So the taxes and particularly the upkeep aren't much higher for these houses than for much cheaper houses 30 miles away.
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