Even the world’s wealthiest people don’t go all-cash

More super-rich are turning to mega-loans instead of dipping into their equity

National /
Sep.September 20, 2018 05:15 PM

Beyonce, Jay-Z, and their Bel Air Mansion in Los Angeles (Credit: Pinterest and Getty Images)

A growing number of super-wealthy people are ditching the all-cash home buy.

Rather than dipping into their equity, David Koch, Beyoncé and Jay-Z, and Daryl Katz, the billionaire owner of the Canadian hockey team Edmonton Oilers, each have bought homes in recent years with massive bank loans. The trend has been attributed to real estate prices rising parallel to record-low interest rates, according to the Wall Street Journal.

There are reportedly 233 outstanding housing loans across the country that are valued between $10 million and $20 million. And they are being issued at an increasing rate: 23 percent of these loans were issued last year, and 16 percent have been issued this year already.

Banks see this as a way for pleasing their clients, some who hold tens of millions of dollars.

“If you have a client who has $50 million with your bank, you would do everything you can to keep them from taking that money out,” Jon Maddux, chief executive of California-based lender FundLoans, told the outlet.

Last year, Beyoncé and Jay-Z turned to Goldman Sachs for a $52.8 million mortgage they used to pay for their $88 million Bel-Air mansion. According to the outlet, they are making payments of more than $200,000 a month.

Katz is making similar repayments for a $47.45 million, 30-year mortgage he took out from UBS Bank earlier this year, which is being used to pay off his $85 million compound in Malibu, California.

Despite the trend, there are still those who forgo financing. In April, David Koch and his wife reportedly paid $40 million in cash for Joseph Chetrit’s Upper East Side mansion on East 76th Street. [WSJ] —David Jeans 


Related Articles

arrow_forward_ios
With a cooling trade war, stocks perform well, including real estate. (Credit: iStock)
Real estate stocks push up this week as U.S.-China trade tensions ease
Real estate stocks push up this week as U.S.-China trade tensions ease
416 West 25th Street and Maverick Real Estate Partners principal David Aviram (Credit: Google Maps and LinkedIn)
Chelsea landlord claims “predatory” lender is charging a crippling interest rate as punishment after losing foreclosure case
Chelsea landlord claims “predatory” lender is charging a crippling interest rate as punishment after losing foreclosure case
Clint Eastwood and The Ranch at Fisher Creek (Getty, Engel & Völkers Vancouver/Sona Visual)
“Unforgiven” ranch listed for $19.2M
“Unforgiven” ranch listed for $19.2M
Denny Hamlin, Dale Earnhardt Jr., and Ricky Stenhouse with 355 Pelham Lane (Getty, Corcoran HM Properties)
The NASCAR effect: How racers turned Lake Norman into trophy home heaven
The NASCAR effect: How racers turned Lake Norman into trophy home heaven
Triangle Equities' Lester Petracca with 533 Main Street (Triangle Equities, Getty)
Record East Orange project lands $317M financing
Record East Orange project lands $317M financing
From left: Trinity Place Holdings’ Matthew Messinger and Macquarie Group’s Shemara Wikramanayake along with 77 Greenwich Street (Getty, Trinity Place Holdings, Macquarie Group, Google Maps)
Trinity Place gets extension to finish pandemic-slowed 77 Greenwich
Trinity Place gets extension to finish pandemic-slowed 77 Greenwich
Estate Partners' David Aviram, FIA Capital Partners' David Goldwasser and Steve Croman (LinkedIn, Google Maps, Getty)
Steve Croman: I was duped by predatory lender
Steve Croman: I was duped by predatory lender
Ivanhoé’s Nathalie Palladitcheff, Cohabs’ Youri Dauber and James Grasso with Cohabs NYC co-living spaces (Cohabs, LinkedIn, Twitter/@ydauber, Ivanhoe Cambridge)
Co-living firm Cohabs raises $450M to continue expansion
Co-living firm Cohabs raises $450M to continue expansion
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...