While it might sound like following in the footsteps of hedge funds, or taking advice from Warren Buffett, who recently said he’d invest in single-family homes, the motivation behind the Facebook founder’s latest move seems to be for entirely different reasons.
Mark Zuckerberg reportedly purchased four multi-million properties that are adjacent to his Palo Alto residence, which he acquired for around $7 million two years ago, according to the San Jose Mercury News.
He apparently began scooping up the nearby properties in December after hearing that a real estate developer wanted to purchase one of the homes and market it as being close to Zuckerberg.
Why anyone would want to buy a home simply to be close to the Facebook founder is beyond me, but that’s the story at the moment, which comes from an unnamed source familiar with the situation.
After the purchase late last year, three more homes were registered in names of entities associated with a company that handles Zuckerberg’s finances, Iconiq Capital, including one house next door and another two behind his home.
In total, more than $30 million was spent on the four properties, with one going for a reported $14 million plus for a relatively small 2,600 square-foot dwelling.
So it looks as if he paid well more than what they are currently worth just to get the deal done.
Zuckerberg the Landlord
The even stranger part about this whole story is that he then leased them out to the original owners. So Zuckerberg is effectively a landlord.
The big question remains as to why he purchased the homes, assuming the story about the developer doesn’t satisfy your curiosity.
I don’t really buy it personally, though it was suggested that he either wants to maintain the feel of the neighborhood, and/or have some control over who lives nearby, which also brings the notion of security into play. Privacy irony anyone?
Others speculate that he could eventually build some mega-compound, though that too seems unlikely considering he’s a rather modest guy for a billionaire.
The only thing that’s clear is the nearby neighbors experienced a windfall, seeing that they were convinced to go from homeowners to renters in an affluent section of Palo Alto, California.
Time will tell what Zuckerberg’s intentions are, assuming there’s a greater purpose behind the transactions.
In the meantime, I wonder if he’ll be taking out any mortgages on the new homes. In case you missed it, he opted for an adjustable-rate mortgage on his original home.
It came with an initial rate of 1.75%, which he later refinanced to another ARM set at 1.05%, attached to the LIBOR index with a margin of 0.8%.
Once his rate rises, he’ll probably just pay off the entire loan, a luxury not everyone that chooses an ARM has unfortunately.
Read more: Should I get a fixed rate mortgage or an ARM?
(photo: Jason McELweenie)