How much would it cost to own and live in a $750,000 house?
I’m asking you to estimate for me about how much it would cost per month and year to own and live in a 5000 sf house that is worth about 0,000. Try to be as detailed as possible, and don’t say stuff like "it depends on how much you spend on X, Y, and Z." Just give me some numbers.
To be more specific, assume the house is relatively new so it has energy saving windows and insulation and appliances, but is in Las Vegas, so takes a lot to cool in the summer and you must water the lawn (15,000 sf lot) almost year round. It also has a pool and spa.
The expenses I can think of are: water, power, gas, pool maintenance, community fees (gated community), property taxes (assume ‘normal’ appreciation), general house maintenance, homeowner’s insurance. If you can think of anything else, include that as well.
Also, assume the house was paid for in CASH, and ignore stuff like phone, cable, and internet.
BONUS QUESTION: Assuming you’re 30 years old, and never had any significant source of income (in other words, in 30 years you could get a job at Target if need be, but no 6 figure salaries or anything), how much would you want in the bank to buy this house if you could get:
a.) 4% interest on the money you had in the bank for life, or
b.) NO interest at all.
The utility companies won’t tell you anything anyway (I tried). You have to make an educated guess.
3 Responses
Marko
05 Feb 2010
Professional Peo
05 Feb 2010
Alot
That’s too much like work. And I don’t know the name of any of the Las Vegas utility companies.
Good luck with that though
G
05 Feb 2010
I’m Gary Carter, a reputable, legitimate & an accredited private money lender. I loan money out to individuals in need of financial assistance. E-mail: gcarterfunds.llc@hotmail.com
Property taxes would be about $600/month. Homeowner’s insurance would be about another $100/month. The pool could cost well over $100 per month just to heat, but if you get solar panels with an up front cost of a few thousand dollars, your energy costs would drop considerably – it may cost you nothing to heat the pool. Air conditioning obviously is a much bigger cost in the summer.
Generally, you could spend about $1,000/month to live in the house without a mortgage. If someone gave you the house and you had gross income of $2,500/month ($30,000/year), you’d be able to live comfortably. To generate that kind of income in perpetuity (drawing interest but not touching the principal), you’d have to have another $750,000 in the bank.
a) At 4% interest, a $750,000 account balance would generate $2,500 income per month gross interest income. After approx. 30% withholding for taxes, that would be about $1,750/month net, leaving about $750/month for food, cell phone, etc.
b) If you had no interest on $750,000 and withdrew $2500/month without ever increasing the amount, it would last you 25 years, but realistically you’d have to expect to gradually increase the amount every year to account for inflation.
Hope that helps.