Buying your dream home is something I've been thinking about for years. Let's discuss the process of buying a dream home and how we can get there.
Every time I go to Honolulu, I spend a Sunday afternoon looking at dream homes. As I get older and think about family, I day dream of having a large flat lot so my kid(s) can run around and play in the grass.
I dream about being walking distance from the beach so we can play in the sand and go snorkeling when he's big enough to swim. After the beach, I imagine showering off outside and relaxing on my lanai in 76 degree weather while the palm trees rustle in the background.
I'm always dreaming because it's free, fun, and motivating. When I was a kid, I dreamed of getting a Nintendo, but never did. As a result, I just befriended someone who had one and went over to his house to play.
When I was getting whipped at work as a recent college grad, I dreamed of breaking free by 40. As a result, I saved everything I had to build passive income in order to have options.
The Desire For The Dream Home Emerges
After retiring from the corporate world, you really don't need much to survive. Once you've got the $20,000+ a year in private school tuition budgeted for the next 17 years (!), the next great expense is a sweet pad, if that's what you want.
I'm obsessed with real estate because it can be enjoyed and it can create wealth at the same time. I don't crave living in a huge house due to the property taxes and upkeep. It's why I downsized to a modest ~1,910 square foot home back in 2014.
But every time I visit one, my desire for a mega mansion goes up! Here's a fun post about my dream of buying a sweet home by the beach one day.
The Dream Home Target
We've been through my thought process about buying a dream home with my parents before. It looks like this plan isn't going to fly because my parents are happy with things just the way they are.
Even though their house hasn't been remodeled since it was first built in the 1980s, they're content. They've added AC and changed all the windows and sliding doors. All they really need to do is swap out the old kitchen appliances, paint the walls, and maybe get some new carpeting.
So now that my parents and their balance sheets are out, I've got to figure out a plan to come up with all the finances myself. The best way to do so is to first decide what type of house I'd love to live in and how much it would actually costs.
The below is a video of a brand new, 5 bedroom, 5.5 bathroom, 6,066 square foot home on a 10,257 foot lot one block from my favorite secluded beach. It's essentially the perfect house for a not so perfect price of $4,950,000!
I gotta do a lot more blogging to come up with this type of cash. Have a look and let me know what you guys think.
Dream Home Details
OK, I'm going to guess that 92% of you think this is one sweet house. 8% of you are just nutso with standards so high you'll never be happy! I think this house would be perfect for up to six people. The combinations I imagine are:
* A family of four plus mom and dad
* A family of three plus mom and dad
* A family of three plus mom and dad plus a housekeeper
* A family of three plus a housekeeper
* A family of three
* A family of four
* A family of five
Anything less than three people would make this house feel too lonely and wasteful. Any more than six and it'll feel too crowded. Upgrading homes as your family gets larger makes sense.
Action Plan To Achieve My Dream Home
To buy a $5,000,000 property I've got to either come up with $5,000,000 in cash or come up with $3,000,000 or more and take on a $2,000,000 mortgage or less.
A property like this Hawaiian house in a similar quality area in San Francisco would cost over $12,000,000 based on a conservative price of $2,000/square foot.
The reality is, such a property is unobtainable in San Francisco for less than $15,000,000 due to it's 10,250 square foot lot. 6,000 square foot+ sized houses in San Francisco go for $15,000,000 and are on only ~5,000 square foot lots.
In other words, this Hawaiian home is relatively good value!
Here's a 6 bedroom, 5.5 bathroom house, 5,455 sq ft on a tiny 3,500 sq ft lot that just sold for $19,466,666! WHAT? Are you kidding me? That is absolutely ridiculous!
The easier way to buy this house is to come up with a $3,000,000 downpayment and get a $2 million mortgage for ~$10,000 a month at today's rate. To be able to qualify for a $10,000 a month mortgage payment, the bank will probably require the borrower to make at least $25,000 a month, or $300,000+ in gross income a year for the past two years.
The only way for me to legally come up with a $3,000,000 downpayment is to simplify life and sell my two self-managed San Francisco rentals. Or, I could take out a Security-backed Line Of Credit, or SBLOC to buy the dream home.
Rental #1:
Zillow value: $3,300,000. Realistic value: $2,500,000. Mortgage left: $800,0000. Net proceeds after 5% commission and transfer tax: $1,560,000. Gross rental income lost: $9,000 a month. Net rental income lost: $5,559.
Rental #2:
Zillow value: $1,200,000. Realistic value: $1,050,000. Mortgage left: $0. Net proceeds after 5% commission and transfer tax: $986,500. Gross rental income lost: $4,300 a month. Net rental income lost: $2,940.
Total money raised: $1,560,000 + $986,500 = $2,546,500
Total gross passive income lost: $13,300 a month
Downpayment Deficit: $3,000,000 – $2,546,500 = $453,500
Damn! Not enough money!
Next Steps Of Action To Land My Dream Home
I could sell my Lake Tahoe vacation property, but I don't think I'll get more than $100,000 net from the place since it hasn't recovered back to my original purchase price. I've got a property management company who handles everything, so the property doesn't take any time away from my life at all.
I could sell my Golden Gate Heights primary residence to extract about $800,000, but I think Golden Gate Heights has the most upside in San Francisco due to its quiet neighborhood, vicinity to good schools, predominance of single family homes, incredible panoramic ocean views, and relatively good pricing of homes below $2,000,000.
Besides, I'd love to have a place in San Francisco whenever I come back and visit. There's nothing like living in your own familiar home compared to a random rental or hotel room. Also, I'm afraid that if I sell all my San Francisco properties, I'll never be able to get back in due to continued price inflation.
Opportunity Cost Of Buying A Dream Home
Losing $8,499 in net rental income a month and paying 5% selling commissions plus transfer taxes and fees seems like a bad idea. The original plan was to keep the rental properties to pay for my retirement. However, the older I get, the more I don't want to manage my rentals. I'm strongly considering hiring a property manager as an alternative to selling as well.
Fortunately, after almost 14 years of blogging, I don't need to depend on my rental income for retirement survival anymore. It's just a little riskier to rely on my online income because it's less stable than rental income.
To come up with the $453,200 downpayment deficit, I'll just need to work harder for the next couple of years. I don't want to sell down other asset classes because I want to retain a proper net worth allocation mix.
The positives of selling the two main rentals and buying this dream home:
* $30,000 less in SF property taxes a year, but it will just turn into $30,000 in Honolulu property taxes
* No more tenant hassles
* Taking profit in an expensive market and reallocating proceeds to a less expensive market that's weak in the $2,000,000+ range
* The ability to do a tax-free 1031 exchange
* Unlocking sunk capital for a better lifestyle instead of more income
Don't Wait Until You're Too Old
Ideally, I'd like to keep all my rentals and buy this type of dream property. But that's not possible with my currently liquidity. Based on my current rate of savings, it would take me about 10 years to come up with the downpayment.
That means I'll have just turned 50, and who knows whether I'll be alive by then. Further, the $5,000,000 price tag might appreciate to $6,000,000 by then using a modest 1.8% annual growth rate.
The older I get, the more I want to live it up before I die. I've seen too many people work so hard and die with way too much left over. The one material thing I appreciate more than anything else is living in a nice home.
Last year, I learned from a Honolulu realtor hosting an open house that the seller was 80 years old and had finally bought an ocean front property he'd been wanting for years. The same realtor told me this year that the 80 year old man had a heart attack. He is in and out of the hospital. Things don't look good.
I don't want to wait until I'm 80 to live the dream.
For those who can afford to own a beach front property, here's one that's currently asking $22,800,000. It's got seven bedrooms, 10 bathrooms, 8,500 square feet of living space, 0.85 acres, with just killer, killer views!
Let's see. To afford $22,800,000 after tax, I would need to sell Financial Samurai for about $50,000,000 to receive about $30,000,000 net. I'd have $7,500,000 million left to pay the $250,000 a year in property taxes. Then I'd have to pay $120,000 a year in maintenance costs. It can be done! Always good to dream right?!
Bought My Dream Home!
A funny thing has happened. I finally bought my dream home in 2020, a month after lockdowns went into place. Inexplicably, the seller listed their home when open houses shut down completely. Because of this, there were only private showings.
The house was amazing, with panoramic ocean views on three levels and much larger space. I pounced on the opportunity after I had gotten preapproved for a mortgage earlier. The preapproval process really is key if you want to be a competitive buyer and taken seriously.
Even though things were kind of nerve-wracking in April 2020, I thought things would get better. As a result, I bought the home for about $200,000 under asking!
I'm bullish on big city real estate and rental properties in 2023 and beyond. I think there's a window of opportunity to buy real estate before pent-up demand gets unleashed. Mortgage rates will come down in the future as inflation fades.
Invest In Real Estate Passively
If you don't have the downpayment to buy a property, don't want to deal with the hassle of managing real estate, or don't want to tie up your liquidity in physical real estate, take a look at Fundrise, one of the largest real estate crowdsourcing companies today.
Real estate is a key component of a diversified portfolio. It is my favorite asset to build wealth long-term. You can now invest beyond where you live with platforms like Fundrise.
I've personally invested $953,000 in real estate crowdfunding since 2016. My investments are focused on heartland real estate for diversification and 100% passive income. As I've grown older and wealthier, I'm all about diversification and simplicity.
Fundrise is a long-time sponsor of Financial Samurai and Financial Samurai is a six-figure investor in Fundrise funds. Our philosophy and outlook about real estate are highly aligned.
That particular house did not have enough outdoor living space. If you’re going to go to Hawaii where the weather is awesome all year round, you need to be spending a majority of your time going outside even in your house. You need a house with a courtyard type area where you are forced to walk outside to go from say your bedroom to kitchen. This I would say is a better listing for $2mm more.
Could you elaborate a little more how you arrived at your dream to live on Hawaii and in particular on Oahu? Big Island seems acreage wise much cheaper but admittedly has less infrastructure. What are other reasons besides the beyond words beauty of the islands to move to Hawaii?
Also, given the premium one always pays for a newly remodeled home why are you not considering a somewhat older but still great home that is far above Bayarea standards?
Lastly, you wouldn’t really pay sticker price given the negotiations you have historically done when acquiring or selling real estate. Why are you assuming sticker price for your calculations?
In Port Royal, FL the home values r get between $15m to $70 million. If you want to purchase a home there, you are required by the association to have a minimum net worth of 10 times the value of the property. Once you reach a certain level of wealth, I think that is a pretty good rule of thumb to live by. If you want to own a $5 million house a lot goes in to support it and you will need to have the resources to do so.
I love the 10X minimum net worth rule! Let me think it over and maybe write about it! Maintenance/upkeep costs truly are expensive. My friend owns a $15M napa property estate and pays a guy $100,000 a year to maintain, and gives him a free house to stay in.
Though I am far, far, far! below those levels my net worth is right on 10x the value of my primary home. I do feel that if I want to upgrade my home, I have to increase my net worth first.
I’m far, far, below 10X net worth based on my primary home value as well. Good goal to have, which I think I can achieve in 20 years. But not now!
Oddly enough, I’m basically living my dream.
The only thing I would like to do is design my own home with all the random elements I want, like urinals in every bathroom, and maybe a fireman’s pole. It wouldn’t really be any bigger than what I have, just customized for me and my family.
My ridiculous dream is to buy a 3 bedroom 3 bathroom condo in my high COL area that prioritizes 1 bedroom condos. The two extra bedrooms would be available for me to take in friends and folks fleeing DV as needed. I was so sad to hear how an old friend’s marriage is going when I saw her over the holiday. I wish I had a tangible way to help her.
A big reason why I’m focusing on building business is being able to buy a sick home when I am older. As a software engineer even if I saved and invested well it would still take a long time to afford a 5m house (without getting lucky from options of a successful startup). That home looks amazing.
The $5 million dollar home looks AMAZING. My only problem is how close you are to the neighbors, but I can overlook that with how close you are to the ocean. My husband dreams of living in the Dominican Republic. We also looked at dream homes that and what it would take to buy those homes.
The neighbors are close, but what I noticed is that it’s total privacy because all around are high walls and tall foliage. Further, the neighbors are all single story, whereas this house is double story.
How much are homes in the DR?
Hi Sam,
Wow these properties are sick! I guess when I retire I’d like to go much smaller in square foot, but either by some type of waterfront OR in the city where shops and restaurants are below. But i don’t want to take on any new loans, just the proceeds from selling my house and pay for a small flat with cash.
The location of those houses is VERY tempting to me, but not the size of the houses themselves. We have a small house on a quarter acre lot on the Peninsula and it is definitely sweet to have the extra space around your house to buffer from the neighbors. Unfortunately it looks like my dream landscaping will cost almost $200K! I’m not sure whether to procrastinate on this or just bite the bullet.
Living close to family is really something special. We are so lucky that both of our families are from the Bay Area. :]
My big dreams are:
– 1 to 2 kids (one on the way!), probably private school + other related spending
– Beautiful but manageable home
– Financial Independence by the time my husband and I are an average age of 40 (by 2027).
– Lots of traveling, for months at a time instead of just a couple weeks at a time.
It’s going to happen!
What’s the point of doing all of this, amassing wealth, and striving for a kick ass retirement if you can’t enjoy it? Couldn’t agree with your idea more. There is a balance between living in the moment now and being reckless with finances. And all of us track and are too passionate about PF to not care about finding the sweet spot. Dreaming is important because dreaming gives you something to strive for. I don’t own any rental properties, so this may be an unsolicited opinion, but I can’t imagine dealing with tenants as being very much fun. Of course I am a perfect tenant (**self proclaimed**) but I cannot imagine how some of these people treat places when they don’t have any financial liability on the line.
Last words. If you want Hawaii and you want to enjoy it before 80. MAKE IT HAPPEN! YOU’VE GOT THIS!!!!!
Thanks for the read and causing me to spend the next few hours on my Zillow app.
Bert
Howdy Bert,
Thanks for stopping by FS, and also sharing your goals. I tried to leave this comment on your site, but it wouldn’t allow for some reason. Says I’m spam! haha.
I like that $45,000 contribution goal! Good stuff my man. I’m sure you will find a way to get there, b/c when you have a goal, it’s much easier to find ways to achieve it.
Your dividend income portfolio is gaining momentum. Niiiice.
As for Hawaii, I go there so often, I do wonder whether I can just rotate cities instead of just go there full time. But that’s fear of change talking. Also, it’s not feasible if my child is in school. We shall see!
Sam
Hey Sam,
Do you use a property management company for your two rentals? Do you have any posts on the analysis of this subject?
Also, do you have any posts on your experience with the property management company for the Lake Tahoe property? This would be an interesting topic for me to learn about.
Erik
Hi, Sam!
My crazy dream is to become a bestselling fiction author. I’m going to do it in approximately four years when Mr. Free and I become financially independent. I’m just crazy enough to believe my crazy dream will come true.
I’m enjoying the journey along the way, finishing the third novel in my trilogy on lazy Saturday mornings in local coffee shops. I work in a demanding corporate job, and found that trying to be a wife, mom, rock star sales rep, community activist, AND a published author were more than I could handle and stay healthy. That realization was startling, but was the catalyst to my defining our financial independence goal after over a decade of preparing for … for something, but I didn’t know exactly what.
Your famous article on net worth inspired me, and I want to thank you. I stumbled across it shortly after I decided to pull my first book from publishing. I was so tired the night before from responding to book bloggers and ironing out last minute details that I’d wrecked my car. I wasn’t ready to quit my day job yet, but I knew the day would come. I decided to keep writing (so in essence, I’m doing what I love), but put off publishing until I had no worries about keeping my day job.
When I saw that Mr. Free and I fell into your definition of above-average net worth as a couple, a fire stirred inside me to get serious about defining my goal.
Happy holidays, and thank you again.
Mrs. Free
P.S. Hawaii is breathtaking! I can’t wait to go back!
Wonderful dream! Thanks for sharing.
I can’t imagine doing it all as a husband, dad, corporate working, activist, and publisher. No way. Hats off to you and the other women who are juggling so much in their lives!
Ah, it’s so good to dream.
Hi Sam!
Our dream is simple, but perfect. Financial freedom by 45. House in Bend, OR with three acres. Modest, updated home with two kids. Have a nice camper van that we can take out whenever/wherever we want. I love working, but don’t want to have to! I want to travel for work less and be around for my family. Minimum 3 vacations a year!
My wife and I have taken action since meeting with you a few months back. We have a plan and I am confident our “dream” will turn into a reality!
Don
Hi Don!
Good to hear from you again. Sounds like a great dream! I’ve got to check out Bend again during the warmer months. I remember it being a lovely, lovely place. So much cheaper than Hawaii too, but I’ve got not roots there.
Best of luck in your journey!
Sam
What a ridiculous house in an amazing location. I believe you once mentioned in one of your posts that enjoying the same beach is free and doesn’t matter whether you have a 200k cabin or 20m mansion. Doing a cursory search in Kahala, I see plenty of ridiculous (to me) homes for less than 3m, many even less than 2m. If I were you and really wanted to live it up right now, I’d just go for one of those!
I am the same age as you, starting to think the same things as yourself, although I’m a bit ahead with my family (4y and 2y old kids) and quite a bit behind in net worth and passive income. I live in a tiny but adequate 2 bedroom in Manhattan and dream about my family making memories in a beautiful location with moderate weather and enough open space and nature to enjoy within our house as well as nearby, like a a beach or nature reserve or state park. I am thinking of taking advantage of the upcoming real estate sell-off/crash (fingers crossed!) and buying a place in San Diego or similar for use as a vacation home and soon/eventually as a full time home. I’d be happy with a 1m home with outdoor space, thats close to outdoor activities. You are fortunate that you already happen to live in California, and that too with a house overlooking the ocean!
Yep, the great thing about Hawaii is the weather and beaches are FREE TO ALL to enjoy.
You’re already living the dream in Manhattan. It’s the best city on Earth…. for 6 months a year :) I love NYC. I just wish I wasn’t so poor when I lived there.
But yes, I love California even more. And Hawaii even more. To exercise during winter and walk around in t-shirt and shorts feels amazing. To be able to go for a morning swim in the ocean for free and get some fresh ahi poke will probably elongate my life. I love it in Hawaii.
Fingers crossed for a 10% – 15% decline in nice homes over the next two years. But not much more b/c that would be terrible for me and many others! ha.
S
WOW…..the numbers make my head spin. In North Florida we bought our dream home in a college town. 3700 sqft 5 bdrm, 3.5ba on 4.5 acres in a picturesque neighborhood on a hill with massive views over a state preserve. I know it is all relative but you could do so much more in Florida with a drop of a couple of decimal points. Our was $315,000 and we are halfway through the remodel and still nowhere near $400k.
Thanks for another good blog. As always, your analysis is awesome. The key is to stay healthy after you hit 50. If you don’t have health, you don’t have nothing.
Sam you could also just rent. My friend rented 210 N Kalaheo for 10k a night, it came with a private chef. The caretakers name is Igor. The guest house is about the same as my house on the south shore. The price has dropped from a cool $35 million down to $25m. I have the contact if you’d like me to put you in touch.
Sweet place! But I think it is too big of 17,000 ft.². I just need 1000 or so square feet like the house and post to be happy :-)
I wonder who owns these type of properties. The maintenance costs must be outrageous. I mean, if you have a family of 18, maybe this house is OK. But the size is just crazy.
Wow that is one gorgeous house! (the $5 million one, the other one is just nuts)
You could try to negotiate down the price down by a few hundred thousand? (don’t know how hard it is to do that in Hawaii) that’ll help with the solid down payment issue.
I agree that interest rates are still low historically, and now may be a good time to get a fixed rate and buy your dream house. You only live once, and if you have the chance and can afford it, why not live in a mansion. Especially if you plan on starting a family so you can all enjoy the place. It’ll probably go up in value over the long run and be able to sell it for a lot more than $5 million. You could throw some nice parties there too. Invite me when that happens:)
Unfortunately, the $5M house is in contract! I’ll find out what it finally goes for. Usually houses of this nature sell for less than asking.
The key is to actually have a family to enjoy the $5M house. Otherwise, it’ll just feel empty and wasteful. But to see your kids be able to run around the house, inside, and outside must be a priceless thing!
All readers who’ve been reading for at least five years, and have shared (e-mail/social) at least 50 of my ~170 articles a year for five years in a row are invited!
My “attitude” is at least real and grounded in reality. Or would you rather surround yourself with virtual yes-men on here?
See, most of the Dreamers I’ve come across in life (in the real world) wouldn’t even be found reading this blog. Because “they know” how to make money by pouring their life savings into lotteries, embracing the power of prayer, and/or “The Secret” by Rhonda Bimbette. That lot got no where and frankly I hope I never meet any of them again.
Needless to say though, these are the same people who measure success the way most Americans in this new century do: by image over substance, by worshiping the McMansion, and by being very loud, boastful, and full of themselves. (It’s no wonder Trump got in! He’s a role model for today’s American!)
I’ve learned that bigger isn’t better in most cases, and possessing multiple luxury cars represents the need to impress others and, more importantly, deep down inside one’s own self. Status-seeking is not only a dead end but a massive waste. I’d even go as far as saying that people who expend energy trying to impress strangers have something of a mental illness. I also think that encompasses most people in this country today!
I’m a little older than you, Samurai, and have a little more net worth as well. I’m also financially independent and will never have to work again. But I didn’t get here by Dreaming but by Doing. By living below my means and by rarely taking the easy route. I’ve sacrificed and learned to save.
Then again, I’m not exactly a normal person by today’s standards. I’ve lost everyone close to me in life, particularly this year. My mother died. My girlfriend dumped me (not for reasons you may think–from a certain point of view I dumped her! You would laugh if I told you, and probably agree that I came out the smarter of the two!). I’ve no friends left, and I in fact have trouble Spending money…
Frankly, I would recommend the wisdom in this blog:
https://livingstingy.blogspot.com/
No, I don’t run it, nor am I related to this man in any way, but I do find myself agreeing 4 out of 5 times (or 9 out of 10) with his reasoning and wisdom.
Makes sense. Sorry about a rough year. Hope things get better in 2017.
Do you sometimes feel what’s the point of having money if it’s not used for happiness, time, and helping others?
You are always welcome to vent your frustrations here or at me.
Merry Christmas!
Get’em with kindness… nice. Without dreams I don’t think we’d be living the life we have yesterday, today and tomorrow. There are just too many influential individuals who changed the future with their dreams… even when they were yet to be understood, proven or realized. Let no one stop you from dreaming Sam. What matters more is when those dreams come true and what that entails… :)
Sometimes when we get what we think we want, it wasn’t.
The risk to reward is pretty high.
Rent for one year in Kahala and if you find it is truly worth it do it.
Ask them to rent to own and if you love it you can buy it and you have
a deposit down.
Also kids have a way of taking your dream house/location and it doesn’t fit
their dream/desires, they just wont care as much as you how hard it was to get. I took the kids to the beach so much that they ended
up never wanting to go because we were always there.(urs may be different) Kahala beach/water
is pretty tame the kids may want waves as they get older and u will be driving to waikiki and north shore. and you will find that neighborhoods
in Kahala may lack next door friends to play with because no one else with kids can afford
it. And I have found that friends will bring more to kids than the beach, friends and
beach and now ur talking!!
Lauren,
I agreed with you 100%. Sam needs to buy his dream house for himself and for his wife because as you said, their children may not like it when they are older. Who would NOT like Hawaii??? But Maybe their children can’t afford to even pay the taxes 20 years from now.
My parents had two vacation houses and my brother and I had to drive 2.5 hrs one way each weekend in the spring and summer to help cut the grass. It was fun in the beginning but it became a drag. My father would cook lobsters for us while we were there. There were good times and had good memories. Both vacation homes were sold over 15 years ago and my parents lost 100K combined. My mom said that she is glad that they sold them because propety taxes would be over 20K combined now. My dad passed away 11 years ago and my mom’s SS is 11K/yr and there is NO way she can afford them now. My brother and I can’t afford the taxes or the upkeep now too.
I would love to buy a place in Oahu but my wife just wants to rent so that we are not locked into one location.
Adam
I will make them love Hawaii! :)
We love the environment we grow up in when we provide love. I love going back to college, walking around campus, hanging out at the old haunts because I loved my time at William & Mary. I don’t love hanging out at my old HS b/c it was more a time of uncertainty and stress after enjoying 4 years in Malaysia prior.
I don’t love assets that lose money because they remind me of my stupidity. If your parent’s vacation homes rose in value and provide awesome memories, you would love the place. Hence, we must invest wisely in our dreams!
Sam
Sam,
We LOVE Hawaii! Will you adopt my wife and I??
Even if my parent’s vacation homes rose in value, I still would not like it because it is not a vacation spot that we like at this point in our life. It was their vacation spot and not ours. As people grow older, their taste and desires change. Over ten years ago, I would have loved to buy a place in Old Quebec Canada. Now, I hate the cold and snow. Our pipe dream is Hawaii but is still very far from our families on the east coast.
Also, try not to dwell on the Lake Tahoe property. You just got a bad break but prices may increase in the future. Not everything in life is a home run. There will always be set backs in life and you learned from it. You have it rented out to break even and tenants are paying your mortgage. Your other investments are doing GREAT! Be Happy and Dont Worry! You are killing it with your 200K plus passive income and whatever online income you bring in. This income already made up the loss on the Lake Tahoe place. You travelled all over the world and you are living the dream so LET IT GO!!
Simplify your life. Sell all your SF rentals and keep your main house with the ocean view. Buy a 2,500 sq ft 3M house in Hawaii and you will be happy. You say Stealth Wealth. A 5M house is far from Stealth Wealth but if it makes you happy then go for it.
You say $250K income will bring max happiness. What price on a home will bring max happiness?
Adam
You should see the palm tree fortress in front of eBay co-founders 4,500 sqft Kahala, Honolulu house nearby. Total Stealth! Nobody has any idea what’s behind there unless you check things out from satellite.
I wasn’t even thinking about Lake Tahoe actually. But thanks for the reminder! Going up in a couple weeks as this winter is great so far, and I’ve got my season pass. Whoo hoo!
Wow! What sweet videos! Real estate is fascinating and a lot of fun to look at. It’s pretty amazing what types of properties there are out there and how prices can vary so much from one locale to another. I used to dream about living in a giant house when I was a kid. Nowadays I’m more interested in a property’s location, quality of construction and charm more than size. Living in a tropical paradise is on my dream list though. Hard to beat great weather, turquoise blue waters and the laid-back lifestyle of island living!
Merry Christmas!
The best value is really to live/buy a cheap house in Hawaii and just go to the beach. All beaches are free access to the public, and everybody, rich or poor gets to enjoy the nice weather.
Hmmm, maybe that’s what I need to do. Look for more efficient living. Forget the $5M place. Give me the $2-3M place, which is equivalent to a $5M place in SF! Ahhh…. good change in perspective.
That is one awesome house in a fantastic location. I’d love to visit when you get it. :)
For us, we prefer a quieter setting. I’m thinking about 5 acre near the beach on the Big Island. We can build a small house and a few tiny homes for families to visit. Portland is still pretty crazy. I wonder if things will slow down in 2017.
Happy holidays!
If possible I would prefer to rent out a place like that for a few weeks per year. That way you get a piece of your dream for much less overall cost. Plus you avoid the hedonistic adaptation that comes with owning/living in a place like that full time…
I think that’s a great idea! Just like renting a supercar for a weekend to get it out of one’s system.
To rent house #1 would probably cost $1,000 – $1,500 a night. To rent house number two might cost $5,000+/night! The funny thing is, those figures seem more painful b/c you know when you wake up the next day, the money is gone.
Well, think of it this way, its a few hundred thousands dollars less (over the years) that you can’t leave to your kids, BUT, their experience there will last a lifetime, and perhaps the experience gives them the drive to work hard so someday they can actually afford a place like that on their own! Money is but a tool to be used for the good life, not something to be attached to :).
Cheers, and happy holidays!
True. But how nice would it be if your parents left you a $10 million trust fund after you spent 20 years of your life slaving away without any expectation of anything?
I’m waiting for my parents to give me a 40th birthday surprise and say surprise! We are mega millionaires and here’s this nice house we bought for you on the beach!
Keep on dreaming!
Merry Xmas and Happy New Year to you Sam!!!
Thanks for all you do,very much appreciated!!!
No problem Steve! Merry Christmas to you too.
Merry Christmas, Sam! Thanks for the thrice weekly insight all throughout the year.
Hmmmm, big dreams? As I sit here typing on a winter beach I dream about a world where I 1) honorably retire, 2) have zero debt, replace my policing income with pension, passive income, and authorship, 3) gather my family under a single roof (why have three kitchens. Inefficient!). Then I can sit at home or on the beach and continue to write and read into the sunset.
Now that I’ve written this I’m noticing a cyclical nature, maybe this dream is just as much about the journey as it is the destination?
As for cashing out of San Francisco and into Hawaii, I’d say go for it as long as you met two conditions. Sell all of your SF properties because the future feels more dramatic when you have burning bridges in your backdrop! Also, just make sure to fill that house with family.
As a professional searcher of recently burglarized California mansions, there are few moments I find more depressing than clearing my way through the house over gunsights and seeing a beautiful, soulless architect’s wet dream instead of a well appointed home base for a family.
It’s Christmas and the best dreams are shared. Thanks for providing yours, but don’t you dare go near the $22 million one. Let’s be honest. That’s buying a hotel, not a house.
Good dreams Jack! I can honestly tell you that retiring early to write on a lanai in warm weather is one of the most wonderful things to do. Let’s not take wifi for granted! This is exactly what I plan to do if I move into one of these homes in my post.
Three kitchens? Are you practicing to be on the Iron Chef? If so, invite me over and I’ll be your guinea pig! I love to eat.
I will always keep at least one place in SF. I love it hear. I think SF is going to be a great place for the next 50+ years. So much innovation!