Traditional banks have reported an increase in the trend of the super-rich taking out hefty loans in the form of mortgages. The low-interest rates on these loans make them very attractive for the wealthy, and they’re able to kill two birds with one stone; not only do they get to own luxurious homes, but they also keep their money free for other gainful ventures.
Tesla’s CEO is not new to making headlines. His tweets give him enough publicity as it is, but he’s now in the news for something different. Of the over 200 mega mortgage loans in the United States, one belongs to Elon Musk.
The CEO’s institution of choice is Morgan Stanley, the bank from which he has taken out a combined total of $61 million in mortgages. These loans are for five different properties, all in California – four in Bel-Air and another one in Hillsborough. According to Bloomberg, Musk services this loan with monthly payments totaling to $180,000.
Musk’s $61-million loan is a combination of four new mortgages he recently took out and one refinance loan. Similar to others who are as filthy rich as he is, Musk uses different loans as a means to an end. Some do it with sustaining liquidity as the end game, while others take loans out to fund their extravagant lifestyles. For most of them, at least those who are smart enough, borrowing helps them do both.
For Musk, the decision seems to lean more on funding his lifestyle, but being the magnate he is, who knows what aces he has up his sleeve? As Tesla’s CEO, the man has never taken a single cent from the company as salary. Actually, he is reportedly cash poor, with some portion of his Tesla stock serving as collateral for his mega-loans. According to reports, the number is anywhere between 40% and 55%.
Being asset rich, however, we doubt whether Musk would mind being cash poor. It certainly doesn’t give him sleepless nights; we can at least tell you that much. Last year, a critic tweeted that Tesla’s goal was to make money for its CEO. However, Elon Musk has time and again insisted that generating wealth has never been the motivation that drives his business ventures.
No Time for Fun
And to this critic, he responded that they should ask themselves why on earth Musk would need the money. He reiterated that he hardly has time for recreational activities, and doesn’t even own a vacation home, a yacht, or anything you would associate with leisure.
As stated before, these mega loans are over 200, but they are rare in the mortgage market. According to public data, loans valued at between $10 million to $20 million are concentrated in California, 123 of them to be specific.
Banks dole out out such huge amounts to maintain the super-rich as their customers. Not all banks though. JPMorgan, Goldman Sachs, and Morgan Stanley are some of the financial institutions that have carved a niche for themselves when it comes to these loans.