If you had $4M, would you spend $2M of it building a house?

Probably a bit too much at $2M out of $4M total for my tolerance. Given you don't have any other sources of income besides the small pension. Using 4% rule it gives $80K per year. Is that enough for you? Assuming you get SS, that reduces your withdrawals once SS kicks in. So you may be able to increase withdrawal over 4% in initial years until SS starts.

I have a pool because DW wanted it. It's used more for parties than by us, with me getting in more than DW. Fortunately it is fairly low maintenance being a salt system. I wouldn't have put in the pool if just my decision. But I also have a really nice big detached garage that approx 1.5x the size of house. Life's good.
 
We'll be in to the new home and land about 600K~650K, but we will get 400K for the current home so no, that does not represent half the nest egg.
Why not do the ICF yourself? It is relatively simple to do, right up to pour day and then get some help.
 
I would not spend that much on house that expensive. All houses have a lot of ongoing expenses such as taxes, insurance, maintenance and in 15 years a new roof, windows, appliances. It takes the fun out of being FI to me...for a house.

Just my opinion. Don't let it stop you if you want to.
 
I helped with one and I am doing our build starting next month. I have a thread somewhere about it that I will update when something starts happening.
ICF are just big lightweight Lego Blocks. 16" tall and 48" long so a great deal of gratification for each one set, and they typically weigh 5 pounds :) I will have all my sibling's grandkids out one day helping.
 
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Well, it depends. If you don't like to travel, and can easily live on $80K annually (or have additional income coming in), it might be worth it. I have a friend who has 83% of his assets in real estate, and he calls himself real-estate rich, and cash-poor. It's preventing him from having the kind of lifestyle he'd like (including hampering travel and buying a boat and a motorcycle). Priorities, first world problems!
 
No... there is no way I would spend half of my savings on a house no matter how much I would love it...

I would find a cheaper way to get 80% to 90% of what I wanted... heck, much cheaper...

But, as others have said... you do you... if you get enough pleasure out of your final product, which I believe is how it is constructed and off the grid... then go for it..

BTW, my house is worth about 12% of my portfolio... which does not include my house as it is not an investment...

OHHH, one last thought.... what could it be sold for if you had to cash out:confused: if it is LCOL area is anybody willing to pay close to $2 mill for it? If not, then you are throwing away money...
 
Texas Proud said:
OHHH, one last thought.... what could it be sold for if you had to cash out:confused: if it is LCOL area is anybody willing to pay close to $2 mill for it? If not, then you are throwing away money...
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If you have ever eaten a steak you are throwing away money. You could have had a hot dog. Have you never bought anything that was something you wanted instead of needed? I've only been saving money for 40 years for this.
 
How much property tax would generate this $2M house? I'm in opposite situation with tiny $2M house in SF Bay Area. I want to get rid of it but it is hard because of huge appreciation and sales tax, while property tax is capped by Prop 13.
 
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The actual building costs are not what drives the initial tax assessments.
Our permit has two valuations per SF:
$165.67 for the finished living spaces on two floors.
$31.50 for everything else. This includes the carport, the balconies, and unfinished basement.
I personally can build it for less. Most people use $220 per ft these days.
 
Late to the party, but couldn't help myself from replying ;)

I think questions like this are a financial/RE version of the "how much do you drink", "any medical marijuana users" topics.

I see all of those as personal decisions, and any path one takes shouldn't be criticized. Situations, life experiences, finances are all different.

Since you asked, that's a "no" for me.

After working in RE-related businesses for decades and living through the oil bust of the early 80's, the defense/S&L bust of the late 80s-early 90's, the easy money bubble of the mid-2000s and subsequent bust, and various rate shocks in between, I want my RE exposure to be one of the smaller parts of my portfolio.

Now that the kids are gone and I'm solo, a house to me is shelter, a place to store and maintain toys, and have room to play with power tools and metal. I'd be happy with a 3/1/1 - 3 car garage, 1 bedroom, 1 bath. But it needs to be nice, in a comfortable, safe neighborhood with good weather. The latter are criteria that make it not cheap, and will require compromises. There's no 3/1/1 in those areas, so I'll end up with a 3/2 and the biggest 2-car garage I can find.

OTOH, I have a friend planning to retire soon and wants the "last house" to be something that she could never afford before now. More rooms, footage, and maintenance than I want. Not my place to judge how she spends her money in what will be the final phase of her life with no other obligations. It's important to her, she can afford it, and she should have it.

Same for you.
 
rmcelwee said:
If you have ever eaten a steak you are throwing away money. You could have had a hot dog. Have you never bought anything that was something you wanted instead of needed? I've only been saving money for 40 years for this.
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It's a matter of degree. Small indulgences incur small risks... and small sense of guilt. Increasing size, means more of each. The point of "excess" is subjective and situational! For most respondents here, to put 50% of a $4M portfolio into a house, seems... fraught and hard to justify. That doesn't render it subjectively undesirable, depending on who's doing the assessment.

Most questions of "can I retire" or "can I afford this", aren't really a discussion of finances. It's merely a quest for affirmation, of what one already believes. This being so, best might be, to just record the results and put a check-mark in the "it's affirmed!" column... and then proceed, as one has been intending all along.
 
rmcelwee said:
If you have ever eaten a steak you are throwing away money. You could have had a hot dog. Have you never bought anything that was something you wanted instead of needed? I've only been saving money for 40 years for this.
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It sounds like you've already made up your mind. Why ask us?
 
I'm in the no camp. Cars and homes are utilities to me. Comfort, safety and practical are my priority. We are in a 3/1 1952 ranch and would be happy to be here while living in DFW. My current % of portfolio is ~20% (15% @ purchase). Future expenses are 3-4% so it fits the bill for living in general for a long time.

If you can cover future expenses without stressing out, enjoy it.
 
If I had 4 mil total, and could easily live nicely on the 2mil, then spending 2 on the house isn't that crazy? (and if I didn't have to worry about market timing to sell to do it - I don't like that part of your plan, not with things looking wobbly).

But...setting out to build a new 2M house means planning on spending 2.5, or more. Lots can happen to raise the price while you build. Lots of headaches. You'll be the GC of your life for the next 2 years, a full time project manager no matter how great the team you hire claims to be.

Then decorating and maintaining a presumably bigger house is going to add expense to your ongoing budget. A 2M house in my area is probably a lot smaller than one in TN, but I'm not cleaning all that square footage or weeding that yard myself - so that's two more monthly hires.

So the simple - would you spend half your NW on a house - is, ok sure. But the building...eh that's where you got me.
 
Not me, but go for it.
 
In a word, no, I would not spend 1/2 of my stash on a house.

Us and some friends of our both built our forever retirement homes in 2010/2011, just before we retired. Fast forward a decade and we both snowbird now and somewhat regret having built too much house. But in our cases, nowhere near $2 million... 1/2 of that or less.

Besides, that much space to keep neat and clean and maintain? No way, especially since your energy and appetite for such things wanes as you age.

Have you considered something other than ICF? We went with 2x4 framing with 3/4" strapping horizontally on the outside of the exterior walls and then sheathing over the strapping, then spray foam. The spray foam oozes in behind the studs so the exterior is all foam other than where the studs and strapping intersect. Very sturdy and very energy efficient.
 
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rmcelwee said:
You can't put a price on the view I have:
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Trust me, it can be had for a lot less than $2M. The fence is the fence around our pool. They run through our yard all the time. One of the youngin’s did the zoomies the other day just like a big dog. Word of advice, they eat everything. Look how they’ve eaten the bottom half of our hydrangeas.
IMG_3644.jpeg

IMG_3645.jpeg


I would not spend $2M on a house because as I get older, I like a smaller house. As others have said, there’s a lot of maintenance and holding cost in a large house. Even if I were going to spend half my nest egg, I’d focus on universal design so that I could more comfortably live out my days.

I live on an acre in a suburban area in a house on a concrete slab (no stairs). I can see the house taking us into all but our final days.
 
If I had $4M after taxes are factored in, my upper limit would be $1M. My personal "rule of thumb" at this age is no more that 25% of after tax assets towards a house. Should we move from our current domicile, I am thinking downsizing (at least in terms of house size) and spending way less than $1M.
 
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