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What Is the Real Cost of a $295 Million Home?
In February 2024, a 9-acre estate belonging to financier John Donahue and his wife, Rhodora in Naples, Florida was listed for sale at $295 million. With three homes and a private yacht basin, it is the most expensive property that is publicly listed in the United States.
Have you ever wondered what it would be like to live on a $295 million estate? It’s certainly expensive. The sale price is one thing, but there are many more costs to consider. Here’s a look at some of the numbers that would go into the purchase of a $295 million estate today.
Key Takeaways:
- The mortgage is the most costly part of owning a $295 million estate, but there are many more expenses such as insurance, taxes, and upkeep.
- The monthly mortgage on such a property could be roughly $1.7 million per month, including an estimated $194,000 per month in property taxes.
- The cost of insurance and maintenance is also significant.
The Mortgage
Perhaps some of the world’s wealthiest wouldn’t need to finance a record-breaking home purchase with a mortgage, but what if they did? Let’s say that you put a 20% down payment on a $295 million home. If you get an interest rate of 6.5% on a 30-year fixed rate mortgage, what would the monthly payments look like? After the initial 20% down payment of $59 million, your principal and interest payments (not including property taxes) would be over $1.49 million per month. That’s over 22 times the national average annual salary.
The Insurance
Although the average homeowner in the United States pays $1,213 per year, according to the insurance leader Progressive, a $295 million estate will require a much heftier insurance policy. It’s a bit tricky to say exactly how much it would cost. Home insurance costs are assessed on a number of factors, and not just those related to the replacement value of the home itself. Part of the insurance costs are based on the value of the contents of the home, the amount of the insurance deductible, and what type of coverage you want (for example, flood, fire, or earthquake insurance).
Many insurance companies would be unwilling to insure a $295 million estate because it’s a huge risk for one company to take on. Some specialized insurance companies deal with high-value or celebrity homes, but it certainly would not be as straight-forward as purchasing insurance for a typical home. The insurance premiums would certainly cost a lot more, as well.
The Taxes
On a home assessed at $295 million dollars in Naples, Florida, the property taxes would be over $2.33 million per year. This is a substantial sum to tack onto other annual costs, such as mortgage, insurance, and maintenance.
Property taxes can sneak up on you. There have actually been instances in the past where luxury homeowners have had to sell their homes because they could no longer afford to pay the property taxes once times got tough.
The Upkeep
The upkeep required for a $295 million estate is a massive undertaking. overwhelming. One rule of thumb when budgeting for home maintenance costs is to set aside 1% of the purchase price of your home every year. On an estate that costs $295 million, that’s nearly $3 million.
What Does Home Maintenance Mean?
Consider the square footage of the home, its age, and its value. For large estates, you would need an army of paid staff to manage the cleaning, building repairs, maintenance of swimming pools, and the grounds.
How Much Should I Save for Home Maintenance Costs?
Some experts suggest saving 1% of the home value for home maintenance per year. According to Zillow, average home value in the U.S. in October 2024 is $359,892. So in that case, you would save about $3,600 per year for home maintenance costs.
What Are the Hidden Costs of Homeownership?
Having the cash to buy the home is just the beginning. Even once the home is paid off, you’re still going to be paying insurance, property taxes, and home maintenance fees—and in some cases, that’s not pocket change. There’s also the furnishings that you will need to fill all that space.
The Bottom Line
Considering the estimated annual costs of owning a $295 million estate, you could be looking at paying millions more per year just for mortgage payments, taxes, insurance, and upkeep. It may seem like you’re living the life, but owning such a home is far more than just the down payment. There are many more expenses to consider.