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Thursday, Dec 03, 2020

Serena Williams, Mark Zuckerberg, Warren Buffett and other rich celebrities who live in modest homes

Why do millionaires and billionaires pay so little for their houses? The answer may explain why they are so rich

The key to building wealth? Living in a home you can easily afford.

That’s according to Sarah Stanley Fallaw, the director of research for the Affluent Market Institute. She is an author of The Next Millionaire Next Door: Enduring Strategies for Building Wealth, in which she surveyed more than 600 millionaires in America.

She found that no factor plays as big a role in accumulating money as where you choose to live. Most of the millionaires she studied had never bought a home that cost more than triple their annual income. Even some high-profile, ultra-rich people – from Mark Zuckerberg to Serena Williams – have bought homes well below their means.

To compile the list below, we compared each person’s net worth with the cost of their homes. We did not have the data to determine their net worth at the time of purchase, so we adjusted the house purchase price for inflation using an inflation calculator to compare that with their net worth today.

For example, the billionaire investor Warren Buffett bought a modest home in Omaha, Nebraska, in 1958 for US$31,500.

Adjusted for inflation, that’s equivalent to US$274,357 in today’s dollars, or just 0.0003 per cent of his US$82.1 billion net worth.
Everyone on this list owns a home that cost less than five per cent of their net worth.

As of 2017, the home was worth an estimated US$652,619. He called it the “third-best investment” he has ever made.

Meanwhile, Zappos CEO Tony Hsieh lives in a Las Vegas trailer park called “Llamapolis” that he created in 2014 as part of his efforts to revitalise the city.

Llamapolis, which was inspired by the Burning Man festival, is home to 30 Airstream trailers and tiny houses. The cost of Airstream trailers ranges from US$25,900 to US$139,900. The most expensive option – US$148,750, adjusted for inflation – is just 0.02 per cent of Hsieh’s US$840 million net worth.

Hsieh said he founded Llamapolis “because I wanted to maximise serendipity and randomness in my life”.

Mark Zuckerberg lives in a home equal to 0.01 per cent of his wealth. He paid US$7 million for a house in Palo Alto in 2011, equivalent to US$7.8 million today. While that’s not an outright modest number, it is modest for a man worth US$71.1 billion.

It comes with a big backyard and a pool and lush, detailed landscaping.

Inside, the house has tons of windows for sunlight.

Evan Spiegel also lives in California. He bought the Los Angeles house he shares with Miranda Kerr, his wife, in 2016 for US$12 million, or US$12.6 million adjusted for inflation. That’s 0.57 per cent of his US$2.2 billion net worth.

The house used to belong to Harrison Ford. At 7,164 sq ft, the house has an open floor plan with plenty of sunshine.

Meanwhile, over in Beverly Hills is Serena Williams’ home that she bought in 2017 for US$6.7 million, or US$6.9 million in today’s dollars, only 3.8 per cent of her reported US$180 million net worth.

The 6,000-sq-ft, three-story Spanish-style residence sits on a quarter-acre lot in a gated community.

It has five bedrooms, seven bathrooms and a light and airy feel.

Outside, the grassy backyard has a built-in grilling station and a swimming pool.

Williams isn’t the only sports star living in a relatively affordable home. Shaquille O’Neal’s US$21.9 million Florida home, which sits on a lakefront property in a gated Orlando community, was put on the market in 2018.

He bought the house in 1993 for a little less than US$4 million, or US$6.9 million in today’s dollars. That’s 1.7 per cent of his US$400 million net worth.

The home has 12 bedrooms spread across 35,000 sq ft. O’Neal’s home also has many additional rooms, like a recording studio, a 17-car garage, a cigar bar and lounge, a home theatre and, of course, an indoor basketball court.



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