Warren Buffett's California holiday home could be yours for $15.5 million

Warren Buffett's California holiday home could be yours for $15.5 million
PHOTO: Facebook / Villa Real Estate

Berkshire Hathaway Chairman and CEO Warren Buffett recently listed his Laguna Beach, California vacation home for US$11 million (S$15.5 million). If he gets anything near what he's asking, he'll make a decent return on his investment.

He paid US$150,000 for the property back in 1971, which is about $900,000 in today's dollars.

What you may be surprised to find out is that Buffet, one of the world's richest people, took out a 30-year mortgage when he bought the six bedroom, seven bathroom seaside spot.

"When I bought it for US$150,000, I borrowed some money from Great Western Savings and Loans. So I probably only had US$30,000 of equity in it or something like that - it's the only mortgage I've had for fifty years," Buffett said.

He added, "I thought I could probably do better with the money than have it be an all equity purchase of the house."

Read also: Warren Buffett only wears suits made by Chinese woman who started with one sewing machine

And indeed he did. "That US$110 or US$120 thousand I borrowed, I was buying Berkshire then," says Buffett.

The businessman says he was constantly buying Berkshire in the early '70s, when the stock was around US$40 a share.

"I might have bought 3,000 shares of Berkshire or something like that from the proceeds of the loan - so that's [worth] US$750 million [today]."

For most people, the home is the most expensive investment they will ever make, and Buffett believes it's a great investment for a family if they plan to be in the same locale for many years. What makes it so attractive, he said, is the 30-year mortgage.

"If you get a 30-year mortgage it's the best instrument in the world, because if you're wrong and rates go to 2 per cent, which I don't think they will, you pay it off," he said. "It's a one-way renegotiation. I mean it is an incredibly attractive instrument for the homeowner and you've got a one-way bet."

As for Buffett's main house in Omaha, Nebraska - don't expect to see that on the market anytime soon.

"The home I live in now I bought in 1958 and I wouldn't trade it for anything," he said.

Read also: Bill Gates' and Warren Buffett's definitions of success has nothing to do with money

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