You wise to be thinking if these things. We actually did build what I wrote about as “my dirty little 10000sqft secret”. We sold it and downsized after about 10 years. The financial aspects weren’t what eventually caused us to sell. With a big complex house it was a hassle to find people with the skills to work on it. We envisioned big parties and BBQs etc, but the house actually got in the way of that. The hassle of cleaning deterred us. So did the fact that once our friends saw our house, the cat was out of the bag that we were financially well off which can be a bit awkward. People may treat you differently. Neither of us grew up with money and it seemed a dream to live in a large country estate home, but we were unprepared for some of the realities. We have since sold and downsized to an average house for our new neighborhood. It was difficult to sell and it appreciated at less than inflation while houses in the more average category doubled in price during that timeframe.
I grew up thinking my family was poor. We lived in the heart of Manila but outside of gated wealthy villages in nearby cities. My parents didn’t buy me toys or new clothes. I only got to wear hand-me-downs because I have eight older siblings.
I knew we were better off than our neighbors because we owned a car. But compared to my cousins, I thought we were poor. They lived far away from the big city, but theirs was the largest house on the block— easily over 10,000 square feet. So large was the house that town officials named the street after them. My aunt showered my cousins with imported toys, which I only got to stare at behind a glass-enclosed bookcase during my summer visits.
My childhood home was not, by all means, small. It was a boring three-story, multi-family building— around 3,500 square feet— with no outdoor living space. We occupied the entire third level, and mom “house hacked” two doors for extra income. But with a dozen people living in that section of the building and only two bathrooms, it certainly felt small.
Later in life, I realized we were not poor. With a dozen mouths to feed, my mom figured out that a big house was not an asset but a huge liability. Instead, she bought rental properties that supplemented my father’s lawyer income.
Mom died in 2007 with, in my estimation, a million dollar, inflation-adjusted, net worth. She had a dozen paid-off properties— one for each of her kids (including my half siblings) to inherit.
I’m not going to lie to you. Now that I have a family of my own and live in America, where everything is supposed to be bigger, I sometimes daydream about living in a mansion.
But here are the reasons why I’m not chasing that dream.
The energy bills are expensive
A good friend of mine bought a 4,900 square foot house with two winding staircases last summer. He was shocked to get a $500 electric bill after moving in. I told him, “It could be because you’re all working from home due to the pandemic,” to make him feel better. But I knew it was the size of his house.
I don’t know about his heating bills, but it’s likely to be more expensive. We have moderate winters, but I’ve once paid over $2,000 the year when oil prices went up for a home half the size. I wouldn’t be surprised if he spends thrice as much.
Contractors will charge you more
Not long ago, I found a heating contractor I liked and asked for a discount. His response was remarkable, “I know you’re not a millionaire; I’m not going to charge you like one.”
It’s no secret, contractors charge more for higher-end homes. It doesn’t matter that your yard is just as big, or the effort to unclog your kitchen sink is the same as a smaller home in the other community. They’ll charge you more simply because you look well-off.
That’s the price you pay for the status.
You’ll pay higher property taxes
This largely depends on location, but for the most part a larger house will incur a larger property tax bill. Taxes on a big new house can be the equivalent of a mortgage payment on a smaller property.
I’ve never increased the square footage of my home. Neither did I make substantial improvements and yet my taxes continue to increase year after year— I had to fight to lower mine twice!
Property taxes are levied by your municipality to fund local public infrastructure, law enforcement, the public school system and other services. It doesn’t matter that you don’t have school aged kids. You’ll pay higher taxes if you live in a big house.
You’ll have a hard time selling it
You’ve probably heard of large, mega-mansions sitting on the market, enduring deep price cuts to sell. The most famous of them all is Michael Jordan’s sprawling mansion in the Chicago suburbs. Nobody wants his house even at a steep 50% discount.
Even ordinary McMansions are hard to sell. Times have changed since the housing boom of the early 2000s. Easy access to subprime mortgages is long gone. People who have the money to buy a large house want upgraded kitchens.
It has been a long time since I’ve last spoken to my cousins. But the last time I heard, they were having trouble selling the mansion they inherited. Your large house could turn out to be just a burden to your kids when you pass away.
It won’t really make you happier
For many, happiness isn’t how big your house is, but how big it is compared to your neighbors. Happiness could last only until a bigger house comes along. I’ve long trained myself not to succumb to this type of jealousy.
Besides, we live in a beautiful 2,400 square foot house, and my daughter’s classmate thinks we already live in a mansion— one child’s cave is another child’s castle!
Buying a smaller home is greener, you waste less space, and save you time and money. The more money you can save, the more money you can invest.
And the more you invest, the sooner you can achieve financial freedom!
Related: How Vanderbilt Squandered the World’s Greatest Fortune