Warren Buffet, the second wealthiest person in the United States is selling his Laguna Beach, CA home, which he purchased in 1971 for $150,000 (approximately 900,000 when adjusted for inflation).
The listing price is $11 million. Even when using inflated dollars, that’s more than 1,100% return on investment (ROI) for his home if he sells his vacation home at the listing price. If we’re talking straight numbers that aren’t adjusted for inflation, that’s a more than 7,200% ROI!
Warren Buffet Had a Mortgage
Perhaps even more interesting is the fact that he had a mortgage on this home.
When asked why he didn’t just buy it outright, he said, “I thought I could probably do better with the money than have it be an all equity purchase of the house.”
While that may seem simple for someone like Buffett, he goes on to say that the 30-year mortgage is, “the best instrument in the world,” for many people who are going to be living in an area for “considerable period of time.”
He specifies his investment perspective by saying that if interests rates go to two percent, you can just pay it off. That kind of negotiation is very rare in investments.
It’s Not All About the Money
Buffett goes on to describe some of the many intangibles that go with owning a house, “I wouldn’t trade it for anything.” He mentions family memories and a home for children and friends as other benefits.
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