is it tacky to spend your inheritance on a big house?

you are not middle class. Go away. 0/10

Anyone in your situation wouldn't be posting here, and if they are then you're a major spoiled d-bag with tons of privilege, and I hate that term.

But in fairy-tale land if I had this amount of money, I'd get a nice home in the 3-5 million dollar range in a place I like to live, or two homes each for about 2 million.. Probably one in Southern California, and the other just a little bit into the beginning of mountains in Colorado, between Springs and Denver. Then I'd quit my job and live comfortably doing whatever I want with the remaining $6 million... My current life style I spend less than $20k a year, so if I splurge and spend $100k per year I can live the rest of my life and only use about half of that money.

If that is how much the houses are near where you work, it seems to make sense. Given your salary, I'm sure you'll manage having only 5 million left over!

If this wouldn't be a troll, I would say, I would invest all of it.

Work a couple more years and then retire somewhere cheap and travel.

Why do you people always assume threads about money are troll threads?

It's a cop-out, a tired trope, and quite frankly it's getting a little old.

I appreciate everyone who has given genuine advice so far. Another question I had - should I hire a money manager, or manager my own funds?

Don't forget having to deal with property taxes, maintenance, cleaning, etc. Mo house = mo problems.

I'd want to make sure you have a handle on how this will impact your cash flow. Not a good outcome to be asset rich and cashflow poor.

Buy a $3M fixer upper instead.

pierre_paris_206 wrote:

Buy a $3M fixer upper instead.

Very few fixer uppers in Palo Alto at that price. That is tear-down level.

At $3mm you're usually just paying for land and building a new property.

Inspector Norse wrote:

one of my uncles just passed away and had no children. I was the primary beneficiary of his inheritance (which was valued north of $11 million).

fortunately this comes right under the estate tax exemption for 2020, so I'll be receiving the entire estate tax-free.

I do OK, money-wise (I grossed 350k last year) - but I'm in the Bay Area where 350k means middle class.

I'm thinking of making a buying a $6 million house in Palo Alto near work. However, it would be unfortunate to only have $5 million left from the overall inheritance (only $3.5 million of which is cash - the rest is in securities, land and physical assets like gold, etc.

Am I being unwise with my newly found wealth? Are there any other formerly poor/working-class posters who received large sums of family money that can advise how to handle the situation?

That seems like more than you should have to pay for a house even in Palo Alto, but my neighbor's house in SF was similarly priced so it's not necessarily crazy, and I'm not going to go on Redfin or whatever at work. I'm guessing you could probably get a $3-4 million dollar house in Palo Alto and still live very comfortably.

Your relatives probably want you to live a comfortable life and having a nice house in a nice neighborhood close to your work is probably a reasonable solution, so I wouldn't necessarily worry about that too much.

I think the main question is how much will insurance/taxes/maintenance/etc cost and how does that compare to your income and remaining cash.

If you want to buy a new house do it. Who cares? It’s your money now.

Try EPA or Mountain View

Can you afford the property taxes and maintenance long term if you lose your job? Would it make sense, tax wise, to pay high property taxes?

Property taxes would be about 30k per annum - sustainable, at the current valuation of the property, but who knows where Silicon Valley real estate will be in 20 years

Inspector Norse wrote:

Property taxes would be about 30k per annum - sustainable, at the current valuation of the property, but who knows where Silicon Valley real estate will be in 20 years

Buy the $6m home. Use some of that remaining $3.5m to buy bonds that pay the property tax for you. In other words, if you need $30k per year, you can get bonds with 3% coupon with $1m. Or, use $500k on 6% coupon bonds. And any combination in between.

You'll hold the bonds to maturity so interest rate fluctuations don't matter. Of course, you want to factor in tax rates so you'd need to buy a more bonds than the numbers above to pay the tax on the coupon payments. Someone making $350k gross should have the excel skills to set this up in a few seconds and determine exactly how much to spend on bonds at a given coupon rate and income tax rate.

With interest rates around 3.7%, why would you pay cash for it? Wouldn't it be better to put that money to work at higher interest rates? If you put $1.5M down, you could put the other $4.5M in a safe investment, and get a small return for the life of your mortgage.

Not Dave Ramsey wrote:

With interest rates around 3.7%, why would you pay cash for it? Wouldn't it be better to put that money to work at higher interest rates? If you put $1.5M down, you could put the other $4.5M in a safe investment, and get a small return for the life of your mortgage.

What investment strategy is truly "safe" but returns greater than 3.7%? He could invest in something with higher expected returns, but it will have some risk.

Anyway, he isnt qualifying for a 6 million dollar mortgage...

I'm just confused why he wants to continue working at his job. Nothing making 350k in silicon valley is a low key job. That's management at a tech company, probably 70 or 80 hours a week.

If you really like working in tech and living in the bay area do much, there are much bigger options depending on what kind of lifestyle you want. Buy someone around 2 to 3 million in SF and find work in SF, buy for 2 to 3 million in Marin county and work remote most days, buy for 2 million in the east bay and work in Oakland.

If it were me, though, I'd say F the job and buy a nice mini ranch of 10 or 15 acres in the east bay or marin county and spend my time coaching high school and traveling out of the area between seasons. Some really nice places with a few acres can be found in those areas for 1.5 to 2 million. Invest the other 9 million and live off of the interest.

Is it tacky to buy an ostentatious house that you can only afford because of an inheritance? It may be a little pathetic but it isn’t really tacky per se... also, who gives a &hit what other people think. You only live once. 5-6m in Palo Alto also isn’t ostentatious. It is decidedly upper middle class.

Is it financially irresponsible to lock up 1/2 of your NW in an illiquid asset? Most would say that it exposes you to lot of risk in one asset class, especially considering this is a one time event akin to hitting the lottery rather than a reproducible event provided by your own ability/skills. That said, you still have enough left over to withdrawal 200k annually in perpetuity if you believe in 3.5-4% withdrawal rates. You also sound like you are going to continue working, hence why you are willing to stomach paying an incomprehensible sum for a mediocre house in one of the most expensive housing markets in the world.

This all comes down to priorities. If I wanted to continue working the rest of my life in Palo Alto then this makes sense. If I wanted to retire and do other things in other locations I would probably fast track that plan.

I also don’t get why people think these threads are fake. There is a lot of money out there. 11m liquid isn’t anything special these days. Hell, it doesn’t even qualify you for asset management/estate planning in HNW establishments.

I agree. If someone dropped $11M in my lap, I would quit in a heartbeat, and I actually like my job. Lots of great land and places to run, hike, swim, surf, climb and/or ride your bike.

Drainthefecesswamp wrote:

I'm just confused why he wants to continue working at his job.

If it were me, though, I'd say F the job and buy a nice mini ranch of 10 or 15 acres in the east bay or marin county and spend my time coaching high school and traveling out of the area between seasons. Some really nice places with a few acres can be found in those areas for 1.5 to 2 million. Invest the other 9 million and live off of the interest.

Drainthefecesswamp wrote:

I'm just confused why he wants to continue working at his job. Nothing making 350k in silicon valley is a low key job. That's management at a tech company, probably 70 or 80 hours a week.

Because he is convinced he is middle class...