Elon Musk Owns a $50K House in Texas: How You Can Build Wealth By Downsizing Your Home
Written by
Dawn Allcot
Edited by
T. Woods
Commitment to Our Readers
GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.
20 Years
Helping You Live Richer
Reviewed
by Experts
Trusted by
Millions of Readers
With all his wealth, Tesla CEO Elon Musk lives in a surprisingly small house near the SpaceX facility in Brownsville, Texas. He paid just $50,000 for the 375 square-foot “tiny home,” which includes a state-of-the-art kitchen.
In May 2020, Musk announced on Twitter that he was selling almost all his physical possessions. “Will own no house,” he wrote at the time. He then sold properties in California totaling $40.9 million. His tiny home in Texas must meet his needs as a place that’s convenient for work, doesn’t require a lot of maintenance or cleaning and allows him to stay focused on his business goals without a lot of distractions.
You might not net profits like that if you decide to downsize your dwelling, but financial experts share the monetary benefits of moving into a smaller house — if you do it the right way.
Clear Clutter Before You Move
The moment you make the decision to move, you can begin building wealth. Start by clearing clutter and listing items you don’t need on Facebook Marketplace or have a yard sale. You’ll put money in your pocket, reduce your moving costs and make it possible to choose a smaller home.
Say Goodbye To a Mortgage
In a best-case scenario, you can use the income from the sale of your home to pay for your new space in full, eliminating mortgage payments. If you can’t do that, Dave Ramsey suggested in a blog post, try to put at least 20% down and take out a 15-year, fixed-rate mortgage for the rest.
Think About the Long Term
Selling a home and buying a new, smaller one might cost more in the short term, especially if your house needs repairs or updates so that you can sell quickly and earn top dollar. But in the long run, you could save thousands of dollars a year.
A smaller home not only reduces your mortgage payments but can also lower your utility bills, which equals as much as 10% of the average American’s yearly income, according to Forbes.
Make a Plan
Make a plan for the money you’re saving, whether that means boosting your retirement contributions or paying down high-interest debt.
If you don’t have other debt, you might consider continuing to pay the amount of your older mortgage payments, even though your payments should be lower with a smaller home.
If you have a $200,000 mortgage, for instance, at a rate of 4.5% for 15 years, if you add an extra $500 to the payment each month, you’ll pay off the house in 10.5 years, instead. Then you can enter retirement with no mortgage payments, putting thousands in your pocket each month that you can use to enjoy your later years.
More From GOBankingRates
