The $100 Million House: What It Really Costs
Have you ever wondered what it would be like to live in a 100 million dollar house? Just ask billionaire business investor Yuri Milner. His purchase of the 25,000 square foot Silicon Valley home breaks the record for highest priced sale of a single-family home in America.

TUTORIAL: How To Buy Your First Home

Milner made his fortune by investing in some of the biggest names in the online world, including Facebook, Groupon and Zynga. He is also the head of Digital Sky Technologies. Milner is certainly enjoying the billionaire lifestyle. His home sits on 11 acres of land and has a ballroom, home theater, gym, spa, formal dining room, two swimming pools, a tennis court and a wine cellar. For all of you aspiring millionaires (and billionaires) out there who dream of living large, let's look at what kind of financial resources it takes to own a home like Milner's. (Make a career out of chasing down the "next big thing". Check out Seek An Adventure In Venture Capital.)

The Mortgage
Perhaps some of the world's wealthiest wouldn't need to finance a record-breaking home purchase, but what if they did? Let's say that you put a 20% down payment on a 100 million dollar home. If you get an interest rate of 4.75% on a 30-year fixed rate mortgage, what would the monthly payments look like? After the initial down payment of 20 million dollars, your payments would be $417,317.87 per month. That's about ten times the national average annual salary! This mammoth mortgage also results in over 70 million dollars going toward interest over the duration of the mortgage.

The Insurance
Though the average homeowner in the United States pays $791 per year in home insurance, a home like Yuri Milner's is sure to 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 types of coverage you want (for example, flood or earthquake insurance).

Many insurance companies would be unwilling to insure a home like Milner's since it's a huge risk for one company to take on. Some specialized insurance companies deal with high-value or celebrity homes, though it certainly wouldn't be as straight-forward as purchasing insurance for a run-of-the-mill neighborhood. The insurance premiums would definitely cost a lot more as well! (Use these simple ideas to save money and get better coverage for your house. Refer to Insurance Tips For Homeowners.)

The Taxes
The property tax rate in the Silicon Valley tends to be a bit higher than the California state average. The rate in this region ranges from 1.20-1.31%. Assuming Milner can expect to pay 1.25% in property taxes, at this rate, on a home assessed at 100 million dollars, the property taxes would be about $1,250,000 per year. This is a pretty big sum of money to tack onto your other annual costs such as mortgage, insurance and maintenance. 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
You can imagine with a house as large as Milner's that keeping everything in good working order is going to cost some serious cash as well. The minimum suggested amount to set aside for home maintenance costs is 1% of the purchase price of your home. On a home that cost 100 million, that's a mere 1 million dollars! If you consider that the house has 25,000 square feet of floor space, there's definitely a lot of space that needs to be maintained. It would be safe to assume that you'd need to hire some full-time help to deal with the upkeep of the yard, landscaping and swimming pools, as well as house cleaning. If you include the annual wages of all these maintenance personnel, the costs certainly add up.

The Bottom Line
Considering the estimated annual costs of owning a home like this, you could be looking at paying about $7 million dollars per year just for mortgage payments, taxes, insurance and upkeep. It may seem like you're living the life, but owning a home like Milner's is far more than just the down payment.

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 with a home of this size and value, that's not just pocket change. And that estimate doesn't even include the fact that you're going to have to buy a huge amount of furniture to fill all that empty space. If these numbers haven't yet scared you off, the residence of the late Aaron Spelling is for sale at the bargain price of $150 million. (There are a number of factors, aside from cost, that you should think about before buying a new house. See Are You Ready To Buy A House?)




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