Do not buy rental property; just more and more expensive principal residences.
Posted by John Reed on
On Friday's, the WSJ has a "Mansion" section. It is what it sounds like—expensive houses.
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My most recent book advocated doing all your real estate investing via your principal residences and moving up to a more expensive one whenever you can do so safely.
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Generally, that would have you end up with a $5 to $10 million dollar house. But I also said NOT to buy more than one acre of lot nor more than about 3,500 square feet of interior home.
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The Mansion section has some houses that comply with those two rules, but most in there do not.
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Basically, larger properties are not homes. They are showing off and jobs. Bigger properties require staff and/or heavy use of outside contractors. That, in turn, puts you into the recruiting, training, evaluating, counseling, and firing of domestic help business.
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Your home should be a source of comfort and security, not a considerable list of new chores. I love Marshall McLuhan’s comment on such rich people. “To the spoils belongs the victor.”
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Over my adult life, I have often read of nouveau riche stars buying some enormous estate of a deceased star of yesteryear. Then, later, I read that they sold the big ostentatious spread for, essentially what I recommend.
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To put it another way, I want you to end up in a multi-million dollar home where almost all the extraordinary value stems from its LOCATION and none from extraordinary acreage or square footage or extravagant finish like gold faucets.
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Around here in the San Francisco Bay Area, I would probably have to own a normal-size home in Palo Alto or adjacent towns like Woodside. There your neighbors would be people like Steve Jobs' widow or Mark Zuckerberg.
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Is there any benefit is living near those people? Not that I know of. They may be a bit if a pain if they need security that interferes with your movements. My point is that the neighborhoods to which I am sending you are where the world's biggest experts on being wealthy live. People who may have tried the 20-acre estate and learned the it's-a-job lesson.
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John this is very true in many countries. One needs to focus on the outcome and let go of one’s ego. Location not size is the key criteria here. Below is an example of how somebody cashed out with A$45 million just based on the location on an unrenovated property.
https://www.dailymail.co.uk/news/article-13089803/The-remarkable-story-ordinary-looking-Sydney-home-sold-45million-sad-thing-happened-new-owners-took-possession.html