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Realities of Real Estate: Where the billionaires live

Bob and Donna McWilliams//July 29, 2011

Realities of Real Estate: Where the billionaires live

As real estate agents, one of the most fascinating parts of our job is the opportunity to see a wide variety of homes.

In these parts, as with much of the United States, you can find everything from the most humble abode to an extravagant mega mansion that feels more like a resort than a private residence. Over the years, we’ve sold nearly every conceivable type of property, all the way from a $14,000 trailer to a grand waterfront estate costing millions.

Not long ago, we had a day that started by looking at a 14,000-square-foot house in Harwood. It had five bedrooms, five full baths, four half baths and seven fireplaces, plus an elevator to effortlessly take you from top to bottom. It could all be yours for a cool $1,950,000.

Yet, by the end of the same day, we were helping a different client, and found ourselves in a $95,000, two-bedroom, one-bath house that didn’t even have a refrigerator. Going through those exclusive properties is great fun, but in many ways, it’s even more gratifying to see a young couple dreaming about buying that $95,000 starter home.

In this land of opportunity, there are a few who can enjoy just about any kind of house they want. But, if you take a look at the two of the richest people in America, you’ll find some surprising differences in where they live.

According to Forbes Magazine, the wealthiest person in America is Bill Gates, founder of Microsoft. Like many of us, Gates has had a few tough years. A weak economy and the relentless success of Steve Jobs and Apple has made it somewhat harder for Mr. Softy to bank the big bucks. But, for a 55-year-old college drop-out, he’s still doing OK, living off a net worth that exceeds $56 billion.

So, what kind of house does Gates and his wife, Melinda, call home?

In 1988, Gates bought a 5.12-acre lot on a lake in Washington State. He paid $2 million for the lot, and then over the next seven years proceeded to build a house like few others. By the time he was done, the Gates had a cozy home of some 66,000 square feet.

In 2005, the house was assessed at more than $200 million. Gates pays more than $1 million per year just in property taxes. Built on a hillside, and with large parts of it being underground, the home is initially unassuming and fits comfortably into its surroundings.

As you might expect with the founder of computer age, the house is a technological wonder. Bill and Melinda each have a pin that contains a microchip. As you move from room to room, the microchip automatically sets room temperatures, lighting, video displays and many other factors according to the preferences for each chip’s owner. Phone calls are also automatically routed to your location, as computers continuously track the microchips with a pinpoint accuracy of just 6 inches in the 66,000-square-foot home.

When Bill and Melinda are in the same room, we don’t know whose microchip takes control; maybe the household computer is smart enough to provide for some sort of middle ground. Or, perhaps Bill’s computer is super smart, and Melinda’s microchip is allowed to take priority. As they say, happy wife, happy life.

The house also includes a trampoline room, and interestingly, there are no visible electrical outlets in the whole place. You know it’s a custom home, when everything that needs electricity is hard wired, and you’ve included features like a trampoline room.

All in all, it might sound like a pretty extravagant place. But the guy is a self-made man who has invented an industry that revolutionized the world. Plus, Gates has given billions to many worthy charities. As a result, the guy probably deserves to have whatever kind of house he wants.

The next richest person in America is Warren Buffett. Not far behind Gates, Buffett is worth about $50 billion.

Known as the “Oracle of Omaha” (his hometown), Buffett made his money by being one of the smartest financial investors of all time. If you had invested $10,000 with Buffett’s financial holding company, Berkshire Hathaway, in 1965, by 2005, that investment would be worth $30 million. The same $10,000 invested in the Standard & Poor’s 500 would have grown to $500,000 over the same period of time.

Even with the tough economic conditions over the past several years, Buffett’s stock has appreciated another 25 percent since 2005. Today, a single share of Berkshire Hathaway class A stock sells for about $113,000.

Like Gates, Buffett is a self-made billionaire. But the place Buffett calls home is a world away from the house Gates built.

Buffett still lives in the same house he paid $31,500 in 1958. Located in a simple Omaha, Neb., neighborhood called “Happy Hollow,” the 6,000-square-foot home has five bedrooms and is assessed at around $700,000. It’s a nice property, in a pleasant neighborhood, but nothing really special.

Many people could afford to buy a house in Warren Buffet’s community. Wouldn’t it be fun to give people directions to your dinner party, and be able to say, “I live in Happy Hollow, just right down the street from Warren Buffett.”

Buffett’s place might not sound like much for a billionaire. But it was a big deal when he bought it. First off, Buffett was only 29 in 1958, and there weren’t many 29-year-olds out there buying $31,000 houses in 1958.

However, that wasn’t unusual for Buffett. In a Forbes magazine article about Buffett, they noted that he filed his first tax return at the age of 13, and was smart enough to claim a $35 deduction for the bike he used to deliver newspapers.

Although Buffett might be a bit of a penny pincher when it comes to his primary residence, like Gates, he has also been very generous with his wealth. Over the years, Buffett has been right in there with Gates, giving billions to charity.

As you can see, even among the very rich, there can be quite a difference in what people see as a comfortable place to call home. In our business, we witness this every day.

Some houses are big, some are small. Some are full of stuff all over the place; others might be stark and neat as a pin. In the end, it doesn’t really matter how much the place costs, where it is, or what it looks like.

Whether you’re Bill Gates, Warren Buffett or Joe the Plumber, the value of your house is in what makes it special to you.

Bob and Donna McWilliams are practicing real estate agents in Maryland with more than 25 years of combined experience. Their email address is [email protected].


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