For someone to have nearly 1,000,000 in cars (who is extremely conservative with their money and is very well advised financially) and own a 25mm house, how much are they worth? Everything is paid off

For someone to have nearly 1,000,000 in cars (who is extremely conservative with their money and is very well advised financially) and own a 25mm house, how much are they worth? Everything is paid off

 
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I'll take a guess. $25 mil in real estate, lets assume a blended property tax rate of 1%. That's 250k a year, plus home owners insurance, maintenance, utilities, even landscaping...probably 300k on the house alone in yearly costs. Double that and assume they live off of 25k a month outside of house, that means 600k a year income after tax. So before tax probably around a $1mil income. Use the 4% rule and you are at a $25 mil nest egg plus the real estate. So roughly $50 million net worth. 

I spent a small amount of time working with high net worth individuals pre MBA and age correlates pretty well with real estate exposure. The older, the higher % in real assets. Most people I saw with a single home worth $25 mil (only 1 lol) usually have more than one home, so total real estate exposure is a lot more and usually net worth is 9 figures. Remember there are probably only a dozen cities in the country that realistically have a market for multiple $25 mil homes. Also most people with houses that expensive had a large event occur, some business equity exit, or purchased the home a lot cheaper and saw it appreciate to that price. 

If inflation really is the theme of this next decade then the FATFIRE crowd is going to be in some trouble. The 4% rule works just fine when investment grade debt and inflation are equal. Now that the spread is negative, I wouldn't want to be sitting on a bunch of fixed payment long duration bonds. All that to say, the amount of money the prior generation needed to retire with $25mil in real estate and $1mil in autos is likely going to be less than the amount you will need to retire with those same assets...so save up!  

 

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