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

Before replying, I noticed that many others have already said what I was thinking. Regardless of how much money I have, it would be very hard for me to even consider spending 50% of it on a house. My maximum would be more like 20% and even then, it would be a stretch. I'd be much more comfortable at 10%. Note that I am particularly frugal, and something of a minimalist with my lifestyle. Before making any large purchase, I always ask myself, "What is the very most this could potentially cost me?" I keep asking myself that question and, as a result, often put myself off, and don't make the purchase!

However, also as others have said, if you really, really want this, and are confident that you can easily afford your desired lifestyle after paying for the house (including all property-related expenses - property taxes, insurance, maintenance, etc) then go for it.
 
rmcelwee said:
That looks nice!
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Thanks. We pinch ourselves every day.

One of the things that strikes me in your posts is the uncertainty in the costs and budget. Quick math tells me $2,000,000 on a 4,200 square foot house is $476 per square foot, and you tell us that it's concrete and metal, which as I understand is much more expensive than a stick build.

It sounds like a great project and will be a wonderful place to live when done. Me, personally, I'd be on edge without having the numbers drilled into and a resulting budget. That's me.
 
Are you concerned about taxes on a $2,000,000 house (even higher with the property being separate)? I do see that it is a very low real estate tax state so maybe not a concern. Looks like it would be about $13,000 a year or thereabouts. We pay about 1/10 of that on a $250,000 house we built.
 
rmcelwee said:
No need to apologize (unless you are attacking me - some of these posts feel like it). Your plan seems insane to me as well. $100K per year on travel? We do ZERO travelling - what a complete waste of money. Every day is a vacation on our land. Little money left for life? You believe that someone frugal with $2M in a LCOL area could not retire? Severe asset valuation changes? If the market dropped to zero and society collapses you will be in your townhouse fighting for food. I will be sitting in my hot tub in a bullet proof, weather proof, sound proof, bug proof off grid fortress with stores of freeze dried food. High cost to maintain? What extreme cost is there for maintenance on concrete and metal? The LVP floors will be cleaned by robot vacs. Costs to build exceed budget? I believe it will cost $1.4M but I'm rounding up to $2M.

Lots of responses saying "why are you even asking if you have made up your mind". As the very first line of my post stated "it suddenly hit me that we may be spending half our money on it". I wanted to see if anyone had any constructive guidance on this or had done something similar. I thought that was the reason for this forum.
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If you feel the location is a forever spot, then go for it. I think some folks are more comfortable having the agility to quickly sell their homes and relocate. What's the worst case scenario for your area? A natural disaster? An influx of people ruining your serenity? Overdevelopment?

What kind of home can you buy now with $2M in your area?
 
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rmcelwee said:
No need to apologize (unless you are attacking me - some of these posts feel like it). Your plan seems insane to me as well. $100K per year on travel? We do ZERO travelling - what a complete waste of money. Every day is a vacation on our land. Little money left for life? You believe that someone frugal with $2M in a LCOL area could not retire? Severe asset valuation changes? If the market dropped to zero and society collapses you will be in your townhouse fighting for food. I will be sitting in my hot tub in a bullet proof, weather proof, sound proof, bug proof off grid fortress with stores of freeze dried food. High cost to maintain? What extreme cost is there for maintenance on concrete and metal? The LVP floors will be cleaned by robot vacs. Costs to build exceed budget? I believe it will cost $1.4M but I'm rounding up to $2M.

Lots of responses saying "why are you even asking if you have made up your mind". As the very first line of my post stated "it suddenly hit me that we may be spending half our money on it". I wanted to see if anyone had any constructive guidance on this or had done something similar. I thought that was the reason for this forum.
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I agree $100k+ a year on travel is insane which is why I said it. We all do things other think is nuts. We love seeing the world more than our backyard but I fully acknowledge that's us.

I also agree a person can live on $2m if they live in lcol of living area and are frugal. I just think it's harder to be frugal with a big house on a big piece of land. Also, compared to my standard of living I would have to live VERY frugally which wouldn't be to be my liking... but we are all different in how we see things I get it.

Also, you are young! Hopefully you will have a very long life. $2m isn't that much to cover 40 years or more. $2m is a nice amount if you have a big pension coming in but not that much when it is the pension!

I found in owning a bigger house everything was more expensive than I thought it would be or should be. Everything! Some examples that came up in only a couple years of ownership:

- New HVAC system (we live in Vegas so had 4 units in a 5,000 sq foot house) was $35k (that was cheapest estimate with highest price being $60k;
- Monthly utility bills - $1,000;
- Property insurance $1k/month;
- Homeowners - $3k a year;
- Housekeeper was just about double our current house;
- Gardener was just about double too (yes I know you can do these items yourself);

Two garage doors and garage door openers to break so double!

One of the big beautiful windows broke... that was over $2k to replace!

We hired a decorator and, of course, paid more as there was more space for her to advise on. Then we bought the furniture to furnish the place. Oh gosh, not to mention a few pieces of art. The list is endless!

We had a couple dinner parties and ended up fully hosting. Nobody expects you to be a cheapskate when you have a big house so they don't offer to bring as much and/or chip in as much. "Look at that house, they're rich, they can afford it."

To me it felt like we were paying for a big house so that we had a place for out of towners to stay when they came to visit which is nice but nice hotels are much cheaper!

Also, we got lucky the pool and roof didn't need any major work while we owned the house. Each of those would have been in the tens of thousands of dollars.

Good luck to you! I realize we all make our choices and I hope your choice works out great!
 
If you can live off 1) your remaining stash then 2) its your forever home 3) you are handy then I see no problem. Personally I send up on the house and have no mortgage and have enough investments to keep me at 100% success. I am in the process of buying that house to be very near my kids which is my motivation. It is way bigger than I need but close to the kids. My new home will drain me of 18% of my current funds but I'll sell my existing house and replenish. Keeps mama happy and I am aware there are only a few years left to spend with grandkids. Whatever your reason you seem to be smart enough to think it all through. Some people spend on homes and some don't. Just make sure you can live comfortably on the assets you use to fuel your retirement.
 
Kings over Queens said:
Thanks. We pinch ourselves every day.

One of the things that strikes me in your posts is the uncertainty in the costs and budget.
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My guess is $1.4 but our GC should be calling us any day with an estimate. Of course, at this time there is a lot of uncertainty. I can only go by sqft and then add on for the pool, etc.
 
Fermion said:
Are you concerned about taxes on a $2,000,000 house (even higher with the property being separate)? I do see that it is a very low real estate tax state so maybe not a concern. Looks like it would be about $13,000 a year or thereabouts. We pay about 1/10 of that on a $250,000 house we built.
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We are a "farm" so property taxes are lower than normal. I honestly don't know what they would be but that probably won't be the deciding factor. I believe insurance will be lower too due to the construction materials but the solar could add some. It won't be roof mounted but there will be equipment in the garage (with concrete interior walls).
 
rmcelwee said:
No need to apologize (unless you are attacking me - some of these posts feel like it). Your plan seems insane to me as well. $100K per year on travel? We do ZERO travelling - what a complete waste of money. Every day is a vacation on our land.
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As the adage goes, whatever floats one's boat. Somewhere between a retirement centered on a house and a retirement centered on travel is something that I have seen more than once: spending something like half one's net worth on a boat and making the boat one's home on the seas. For some it's travel, for other's it's a castle, and for still others it's a bit of both. It's great to have options. As with so many threads here, I think "first world problem!"
 
If you can make it work financially and it's what you want, just do it. We are all different, (Thank God!), and hence have different priorities as to where we spend our money on.
 
OP seems to know what he wants. He could save by making that fancy attached shop a cheaper outbuilding but then it probably wouldn't be the dream house. It's not my dream but he and his wife seem to have been working toward this for a long time.

I think the fraction of net worth allocated to housing isn't important. The critical thing is having enough left to support sending. A lot of people in east Tennessee or anywhere in the county would be happy to have $2 million remaining financial assets.
 
It seems your biggest cost on this home build is the remoteness of the location. Seems like you're going to be spending more to get materials there and the crew. Then again that's part of the appeal of that site. Actually it's probably all of it LOL!!
We have set aside a pretty hefty Budget for travel ourselves but I can sure see your viewpoint. I know a lot of people that just don't like traveling at all and are much more happy spending their time at home and making it what they want.
 
Have fun doing what you're doing - we rebuilt an old house in our early sixties - took about five years, but still real happy with it - except it's two story, and going up and down feels a bit risky now and again.. Bought a winter home in SoCal twelve years ago, single story, but has very little craftsman touches - a contractor grade Santa Fe style. I keep looking because we like houses - this one had a lot of pull - neighborhood, remarkable interior work, and a man's home should be his castle.
2383 N Park Blvd, Cleveland Heights, OH 44106 | Zillow
On the down side, it's in a city named Cleveland, weather, size is about four times what we need, and someone broke it into apartments. Don't have the steam to overcome those negatives.
 
Have you previously owned a house that big? I have not but we built a 3700 sf dream home with lots of cost over runs, lived in it 20 years. Loved it. Life changed it ways we never expected and decided to sell. I thought I could get $1 million in 2017. After a year I accepted $850k. Problem was it was the nicest, most expensive house in the area. Anyone who could buy it could build it.
Next, started building a 2,200 sf house in 2019. Completed for $650K all in, land, well, barn, house. Paid cash did a ton of work myself. Now worth $1,200,000.
To answer your question. When I started building, I had $2.6 mill.
Spent $650k on house.
Today we have $3.8 total. House $1.2 mil. Accounts $2.6.
If had $4 mil I’d budget $1 mill for house. Of course you will always have 20% cost over runs.
You just never know what the future holds. It’s good to be flexible.
Never love something that can’t love you back.
 
skyking1 said:
It seems your biggest cost on this home build is the remoteness of the location. Seems like you're going to be spending more to get materials there and the crew. Then again that's part of the appeal of that site. Actually it's probably all of it LOL!!
We have set aside a pretty hefty Budget for travel ourselves but I can sure see your viewpoint. I know a lot of people that just don't like traveling at all and are much more happy spending their time at home and making it what they want.
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Good point... And that goes for on-going maintenance too. In big cities/towns, there are lot of folks that you can hire to fix things for you quickly and competitively. But if you are in a "remote" location, maybe not so much. A big part of maintenance in a country setting is the time and distance for these folks to get to you. You are going to pay for their time and travel too. And these days, that ain't cheap. Of course if you are a DIY type person, a lot of that can be avoided.
 
Car-Guy said:
In big cities/towns, there are lot of folks that you can hire to fix things for you quickly and competitively. But if you are in a "remote" location, maybe not so much.
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Very true. I did not think of it much if at all before we left the city. But around here most of the contractors and handyman types don't advertise and don't have a web site. I have dug for info, asked for referrals, and resorted to the dreaded facedork to find someone to do a job. We might have been able to GC on our garage in the city. Here no way, our GC had the know who and the know how.
 
MC Rider said:
Very true. I did not think of it much if at all before we left the city. But around here most of the contractors and handyman types don't advertise and don't have a web site. I have dug for info, asked for referrals, and resorted to the dreaded facedork to find someone to do a job. We might have been able to GC on our garage in the city. Here no way, our GC had the know who and the know how.
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:2funny: Must be that way is many country settings. Sure is around here.

Oh, and when you do find them (they are out there) they are not going to be in a rush to fix your problem. They'll get it done, when they are ready!
 
Sounds like it is your dream, and I think there is value in following your dreams.
And I think there is little value in holding on to and counting a bunch of dollars you will never spend.

As other's have said, what really matters is what you have left - and with $2 mil left it doesn't sound like there is much danger of you ending up eating cat food.

Had you asked if a paid off home and $2 mil plus Social Security (i.e. ~$80K a year plus SS) was enough to retire in a LCOL area, you would have likely gotten a much different set of responses.

For me personally, I will want *less* house as I get older. My $2 million dream home would be more like a $500K house with a $1.5 million dollar view.
But you do you. You only live once, seize the day, and all that jazz! :)
 
I gave a lift to an old fellow, heck I towed his friend's car to town after getting gas did not fix it. He said that people in Coulee City by Grand Coulee dam could not get a plumber up there for nothing! That was earlier this year and I just remembered it.
 
@rmcelwee find the longest run of ground, it does not need to be flat it can be on a slope, with the best approaches and have your dirt guy run a grader over it and put a crown on it for drainage, then let the pasture have it. Bonus runway! :)
 
Just a different perspective. Our house is worth about the same as our net worth. It is not a mansion, only 2000 sq ft. Perfect for us. It is paid off. We have owned it for six years and have done a lot of remodeling, fixing up.
New primary bath, new hardwood floors, trex decks. We are now working on the landscaping.
I love where we live, I love our house, we live on the river but high up out of the flood plan, lots of trees and privacy. I also love the area, close to lots of parks and trails.
We have a lot less than 2 million.
I know it will sell when needed and the money can be used for long-term care
 
Don't forget that in order to pay for a $2MM house, you have to sell assets, which I assume have appreciated and are taxable. So, to generate $2MM house, you might need to sell $2.4MM in assets. Also, in my experience, maintenance scales with the size of the house. True, everything will be new to start out, and under some kind of warranty, but that's not forever. HVAC will go out, you'll have plumbing problems, windows will break, you'll need to do some kind of maintenance you hadn't thought of, furniture will wear out or won't be exactly what you were looking for, etc. Property Taxes and Insurance only go one way, so be sure to budget for that.

But we only get to go around once here, so if this is what makes you happy, by all means, do it!
 
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