Why borrow when you can pay cash. Its not like there are any safe investments that pay more than 4 percent interest.
typically when buying a place for $20M, it's almost always in cash, and one of the reasons it's in fact desirable is b/c it's a 'safe' place to park said cash
You don't have to get a traditional mortgage. He could have effectively taken out a personal loan with the house as part of his collateral. I guess he can still do that, and may. But i would not consider it a wise place to "safely" park cash. There are better options. If he wants exposure to real estate there are better options. And he likely already has and will have plenty more opportunities to invest his wealth in a wide selection of alternative investments that may be riskier, but have higher return potential. If you wanted to to a classic investment profile for him, based on his age, net worth, current and future earning potential, risk tolerance, etc, etc, I have a hard time seeing how that would result in "buy a $20 million house and pay cash for it". Just my 2 cents, though.
I said it long ago: DH always wanted the Lakers. The Nets thing was a farce. DH just didn't want the Lebron-ish "Shaq-lash".
With that kind of money, the very least he could do is establish a line of credit and essentially borrow the money from himself. Also, with that kind of money, if he can't find an investment that will pay more than the house interest would cost him, he needs new financial advisors.
Oh, goodie. Name-calling. You're dumb and/or naive if you believe all the crap that "insiders" (Dan Fegan) were feeding to the media. DH didn't want the backlash. He saw LeBron get vilified. Unfortunately he only made it worse, how this all played out. Sure, he let Fegan try the Brooklyn route; it was obviously Fegan's wet dream, and DH would've been fine there. But he told Hakeem (Chron article a few weeks back) there was a team where he really wanted to go, and it wasn't Brooklyn, and you can bet it wasn't Houston. Nets only, hunh? Buys a $20,000,000 house right off the bat in LA? Just happened to be re-habbing in LA all these weeks.
It isn't like he doesn't have the means to buy the house. If I was suddenly making $300,000 a year, suddenly that Kia I was eyeing, magically turns into a Mercedes.
my guess is that he's thinking like most people with the cash: why hassle with a bank when u can just pay it off and be done with it really, i don't know anyone that mortgages or secures any type of loan for a place $10M+. i mean it's typically seen as a welcome opportunity to finally dump/park some of your cash somewhere
I think most people with that kind of cash do not pay that kind of cash for a piece of property. I find it hard to believe that any financial advisor would advise sinking $20 million in cash into a house. With $20 million, you are generally nor hassling with a bank. Your financial guys and tax attorneys are making all of the arrangements. Why dump your cash into a house that will generally be worth less the minute you buy it?
u know someone that mortgaged a 20mill house? b/c i don't, and i'm going off of dozens and dozens of instances
You don't have to "mortgage" it traditionally. To that point, the tweet might be misleading. Perhaps he is "financing it" somehow, but just brought cash to the table at close. Anyway, I concur with bobrek. I find it hard to believe that $20 million house is the first or even 100th thing that comes to mind when thinking about safe place to "stash" cash. There are much much better alternatives.
