In October 2023, we upgraded to a larger finished home we didn't need. Three years later, I want to share whether it was worth it, so you can make a better decision if you're tempted to do the same.
More than any other material item money can buy, a home is the most desirable. The average person spends over 14 hours a day at home, so there's also probably no investment we use more. Sure, we have to wear clothes in public, but we swap them out every day. And last I checked, my t-shirts and shoes don't appreciate in value.
Fine watches and jewelry are nice and can appreciate too. But we don't wear them every day, and we definitely don't live inside them. So hands down, a home is the best combination of enjoying your money while also potentially making a positive return.
Upgrading to a home you don't need is a slightly different animal.
If you upgrade into something other people find undesirable or unnecessary, your home probably won't give you a positive return you're hoping for. But if you upgrade in the “frenzy zone” price range, the one buyers fight over in your market, you'll almost always have strong demand when it's your turn to sell.
Our Thoughts On Owning A Nicer Home Than We Need
My wife and I talked about this on our podcast, and we've concluded the purchase was worth it.
It took a tremendous amount of convincing to get her to agree to move. She finally acquiesced after I promised this would be our last house ever, assuming we stay in San Francisco. That promise was the main thing that got her over the line.
Our children have enjoyed the extra space tremendously. They play in the enclosed front yard every day, and we don't have to worry about them getting hit by a car or snatched by a stranger. The neighborhood is quiet and safe, although there's now a lot of remodeling going on.
I've also noticed our boy needs to run around more than our daughter, which seems typical. Once he's burned off the energy, it's easier to get him to focus on homework.
If you have a boy, or any extremely active child, a home on a large, usable lot can be beneficial for childhood development. That's something we didn't fully appreciate before buying.
There's also peace in knowing we'll never move again. For 20 years, from 2003 to 2023, I was addicted to real estate and constantly climbing the property ladder. Now that we've reached the top rung we can afford, I feel settled in a way I didn't expect. No more wanting feels amazing!
Decumulation Through Real Estate Feels Satisfying
If you're focused on decumulation, or at least on spending more of the hard-earned money and risky investments that have paid off, it feels good to turn that money into something you actually enjoy.
A nicer home checks the box of being something we use every single day, which is more than I can say for most things I've spent on.
Don't Feel Too Bad About Not Making More Money In Stocks
From a purely financial standpoint, the toughest part of upgrading to a home you don't need is thinking about how much more you could have made had you invested elsewhere, usually in stocks.
The S&P 500 is up over 80% since we sold stocks and Treasury bonds to buy our home. The opportunity cost of not making more elsewhere must be weighed against the utility you derived from your home.
It could always be worse, though. I talked to one dad who sold his Salesforce (CRM) stock in 2009 to buy his home. Had he held on, the stock would be up about 10X. I talked to another dad, currently thinking about upgrading, who worked at Tesla and sold shares in 2015 to buy his place. That stock is up more than 20X since.
Both of their properties are also up since purchase. But their old stock positions are up dramatically more.
All in, I'm sure I've left over $1 million on the table by buying our house, net of how much the house has appreciated. The opportunity cost could have been worse, but luckily the San Francisco housing market is strong thanks to AI. It's boom loop time.
I'm not sure we could buy our house today if it came on the market. In 24 years of searching for property in San Francisco, I've never seen a lot this size at this price point. So maybe the market is adjusting higher than I think, especially as the west side of San Francisco gets more popular.
Biggest Surprise: How Low Maintenance Has Been
The general recommendation is to set aside 1% of your home's value each year for maintenance. It's a decent rule of thumb, especially if you own a condo with a homeowners association, which I also do.
But after three years in the house, here's what we've actually spent:
- Roof and gutters: $1,000. Patched part of the roof, removed nails, and added screws all around our rattling gutters after a particularly large storm.
- Wooden fence: $1,200. Replaced six rotting fence planks. We'll probably need to replace a few more, so let's call it $2,000. We missed these during our nearly three-month escrow, so please don't skip the inspector.
- Water heater: $500. Replaced an expansion tank after the release valve started dripping. We were supposed to pay a plumber to inspect the water heater and radiant heat system every year. We didn't, for three years, because nothing went wrong.
- Refrigerator: $300. The fridge stopped working one night in June 2026. We paid $100 for a repairman who came at 10pm and found nothing wrong, then $200 for an electrician to inspect the wiring and swap out a fuse.
- Gardening: $800. We do most of it ourselves, but paid for two cleanup sessions over three years.
- Outside electrical: $500. While installing our hot tub, my favorite luxury expense, the electrician flagged several outlets that weren't Weather Resistant (WR), so I had him swap them all out while he was there to make them up to code.
- Cleaning: $400. We caved and paid for a deep clean once. It was glorious. Then we felt guilty about the cost and stopped. Our neighbor has cleaners twice a week, which is what catalyzed me to reach out to their cleaners in the first place when I was going for a walk.
That's roughly $4,700 over three years, or about $1,567 a year for pure maintenance. Practically nothing, and far below the 1% rule of thumb.
The low cost isn't entirely luck. We were thorough during the three-month escrow and had the sellers fix as much as possible before closing. The house had also been gut remodeled and fully landscaped right before our purchase, so we bought near the top of its maintenance cycle, not the bottom.
If You Plan To Upgrade To A Home You Don’t Need, Do This First
Run through this checklist before you fall in love and experience buyer’s remorse:
1) Make sure your spouse is genuinely on board. Not “fine, whatever” on board. Actually on board and extremely excited. A reluctant partner turns a great house into a recurring argument. Make a promise you can keep, like I did, and mean it.
2) Run the 30/30/3-5 rule. Have at least 30% of the purchase price saved (20% down, 10% buffer), keep the monthly payment under 30% of your gross income, and limit the home price to no more than 3 to 5 times your annual gross income. Break this rule and you invite stress.
3) Buy just above the frenzy zone. Pick a home and neighborhood that buyers fight over, then look for a price point about 10% higher. The frenzy zone is where most people bid, which means bidding wars that can leave you with tremendous buyer’s remorse if you win. Just above it, there’s less competition and better deals.
3) Stress test your cash flow. Model the new mortgage, property taxes, insurance, and maintenance, then assume one income disappears for six months. If the math gives you a panic attack, you’re stretching too far. I went through a six-month period of living paycheck to paycheck which recreated the stress I felt in banking almost every day.
4) Decide mortgage vs. cash with your opportunity cost in mind. Before you sell investments, ask what that money would likely earn if you left it alone, because that’s the cost you’ll feel most. Paying cash removes the monthly payment but concentrates your money in one illiquid asset. A mortgage keeps more invested but costs you fees, paperwork, and a lien. If you can afford to pay cash and the home is worth 30% or less of your net worth after purchase, the cash route makes sense with interest rates this high. You can often get a better deal, or win the bid, by closing quickly with cash.
5) Hire an inspector and use a long escrow. This is where you create leverage. Find every defect and push the seller to fix as much as possible before closing. Our low maintenance bill is a direct result of being relentless during escrow.
6) Match the home to your family’s actual life. Active kids need a lot to run around on. Aging parents with bad hips prefer a single-story or a guest suite. Buy for how you’ll really live now and in the future, not for the staged photos, and not to impress people who aren’t paying your property tax bill.
7) Make sure your spouse is genuinely on board. Not “fine, whatever” on board. Actually on board and extremely excited. A reluctant partner turns a great house into a recurring argument. Make a promise you can keep, like I did, and mean it.
We'd Upgrade Again If We Had To Do It Over
In conclusion, we would happily buy this home again. The experience has worked out, but of course, it could easily have not. I cannot get these three years back, but I can appreciate how this house has provided a nicer life for my wife and children.
The one thing I might change is taking out a mortgage so I wouldn't have had to sell so much stock. But a mortgage would have cost about $10,000 in fees upfront, plus more work, plus the bank holding a lien. So maybe not.
Money is meant to be spent and enjoyed while we're still alive. So if you want to upgrade your home, go right ahead. Just follow the 30/30/3-5 rule so you don't put yourself in financial jeopardy and end up too stressed to enjoy the place.
Readers, have you ever upgraded to a home you didn't need? Was it worth it, or do you wish you'd kept the money invested? And if you're on the fence right now, what's holding you back?
Invest In Real Estate Without Another Property Tax Bill
Upgrading our home concentrated a big chunk of our net worth in one illiquid asset on one street in one city. Great for the kids. Not great for diversification.
If you want more real estate exposure without selling stocks, fixing fence planks, or paying a plumber at 10pm, take a look at Fundrise. AI may be the next general-purpose technology, but every model needs a physical home. Hyperscalers are pouring hundreds of billions a year into data centers, and power and permitting have become the binding constraint. Real estate is where that constraint gets solved.
Fundrise lets you invest in private real estate passively, with a low minimum. Fundrise is a long-time sponsor of Financial Samurai, and our investment philosophies are aligned.
My wife and I recorded a podcast episode looking back on our first three years in the house, including whether she’s forgiven me for convincing her to move. Listen on Apple or Spotify.
