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HMW #155: Why McMansions are Great

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Read Time: 7 minutes

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Who loves McMansions? YOU should. That is if you understand how they are actually good for real estate. Sure they aren't aesthetically pleasing, they are often grotesque displays of wealth, and often are built by "new money folks" with money to burn located in a neighborhood just not ready for it.

So why is this great? Well, lets dig in so you can encourage McMansions to come to your town, rather than fight them tooth and nail.



I get it, but just hear me out. 


Benefit 1: McMansions are about zoning, not builders


When you play Monolopy and purchase a property, the zoning of that deed (address card like Park Place) allows for a single or multi-family house to be built on the property and eventually a hotel. It's not stated in the game directly, but the reasons some properties are more expensive the others is that the higher priced areas allow for higher density properties to be built on it. Boardwalk is more expensive than Baltic Avenue because its zoning is more favorable and allows for larger homes and a larger hotel to be built on it. The bigger property that is allowed to be built, the more expensive it is to buy and the more money it can make once the larger properties are built.

So when a McMansion is being built in your neighborhood, it's not a builder pushing the envelope or breaking the laws, it's them maximizing what the zoning already allows. This is what good business people do. This is what great investors do. This is also what you should do: buy property that is smaller than the lot allows and make it as large as the zoning allows. 

You should sell when you can't add any more square feet. You juiced all the square footage possible and can no longer add value to a property at this point and can no longer can increase your returns through expansion. It's a sign to cash out and buy another property to expand out on.




How is running a business to maximize income greedy? Someone bought a property at a price both parties agreed to. Then, they hired a crew to build a home at a price both parties agreed to. And then they sold a property at a price both sides agreed to. 

Greed usually implies someone was taken advantage of and that's not the case here. Building large homes is a very transparent and transactional business that moves really slowly and requires zoning approvals, city inspections, contractor licenses, lending approvals, appraisals, insurance, and a ton of other public discussions. So, let's take greed off the table in your McMansion hate.

Not sold on McMansions yet?  Let's try looking at it another way.


Benefit 2: McMansions are about design, not size


McMansion is vulgar slang for bad design, not for large homes. This is often misused by the public to describe someone building a home to it's maximum zoning. This is completely wrong. Bad design includes mismatched architectural styles, poorly designed roofs and windows, inefficient floor plans, and areas of wasted space. They are ugly homes.  

But guess what? You can make large homes beautiful too. And this helps you.

Usually the first builder to maximize a home's potential in a neighborhood builds a new home that is ugly (according to the correct McMansion definition). It also stands out in one other very obvious way. It's the first 5,000 square foot home in the neighborhood surrounded by dozens of 2,000 square foot homes. 

Instead of hating this builder, you should encourage them. They are taking a big risk here and in order to minimize risk, you often have to cut corners on design to make the investment work. Building the first large home in an area is not a proven business model yet and there are trade-offs for making this step.

So if you own in this neighborhood and see this happening, realize this:

  • Your area is becoming more desirable and wealthier
  • Your home will increase in value after each McMansion gets built
  • Builders building a home with good design will come after the McMansion model is proven
  • Your home will be at it's maximum value when good design starts and you'll love builders again




I get that. Some rich people suck. Some don't. But stopping large homes from being built is best served going to your zoning board and adjusting what can be built. The rules are in place for this to eventually happen, just like in Monolopy. Don't hate the player, hate the game. And if you hate the game, then do what you can to change the rules, not the players.


Benefit 3: Opportunity abounds in McMansion-tested areas


As a real estate investor, this is what to look for to benefit as well. And this is all set up nicely from fellow McMansion builders:

  • Buy properties that are not at maximum square footage in it's current design. Don't be the first builder to go the max size, let others try and fail. Or try and succeed. Let other properties around you increase the demand for larger properties.   
  • Consider where you are in a McMansion lifecycle. Are homes in your area converting car ports to bedrooms? Are they adding just an extra bathroom and primary suite off the back but nothing bigger? This is a precursor to a McMansion neighborhood. People want to spend more money on a larger home and are attracting more wealthier residents, but just not the type of wealth that wants the largest home possible just yet.
  • When you design or expand or build, use professional architects and builders to get highest value.  If there are a dozen McMansions selling for $1,000,000 all at 5,000 square feet. Then going higher-end with great taste and design will get you $1,300,000 at 5,000 square feet.  And your neighbors will finally appreciate a large home being built and you'll start a trend for the remaining renovations.
  • Larger properties increase property tax. Higher collection of property taxes improve schools. Schools increase property value. It's a cycle and everyone is somewhere in this cycle with every home purchase. Understand where you are, or where you want to be, and plan accordingly and enjoy the ride. It's inevitable change, so best to embrace it.



I'll admit you accepting McMansions as a part of life is a win in my book. I wish everything was pretty and nothing ever changed, but that's reality. If you look at the good coming from McMansion building, your day will just be a little brighter with this acceptance.  And it will save you a lot of energy and misdirected anger at builders and buyers of large homes in your improving neighborhood. 

And I have to ask, would you really rather live in an area that is experiencing the reverse?




Didn't think so! Glad to see you came around on seeing my side of things.


In other words:

  • McMansion means bad design, not large new homes.
  • Hate the zoning rules, not the builders building to the allowed code.
  • It's a sign of desirable and growing area that you helped create, enjoy the ride.

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