Your house is not an asset

I hate to burst your real estate bubble, but that is exactly the kind of thinking that is keeping you from making more sound, and profitable investments.



There are many definitions of the word "asset", but I am going to break it down as simple as possible, right from the mouth of Robert Kiyosaki:

"An asset is something that puts money in your pocket; a liability takes money out of your pocket"

Now understand we are talking about assets and liabilities in the context of financial investments only. Not the obvious emotional, and physical assets of your home.

If you own your home with a mortgage that has not yet reached maturity, odds are it is a liability. Remember, an asset is something that puts money in your pocket. Think about your home right now:

- Toilet paper
- Cleaning supplies
- Mortgage
- Gas
- Water
- Heat
- Maintenence
- Garbage
- Insurance
- property taxes

And the list goes on. Understand that your home is a liability because by simply owning it, it requires money out of your pocket every month.

Sure, your home may be increasing in value, and appreciating. But, that is on paper, and is not a true asset. A true asset builds value over time AND puts money in your pocket every month, or year, or whatever. Would you buy a stock if instead of paying you quarterly dividends, it CHARGED YOU every quarter, thousands of dollars? Sure your portfolio is rising, but would you like to buy stock, and then pay more every quarter just for the hell of it?

Less than 2% of our population is wealthy. Which means that odds are THE SAME SHIT EVERYBODY ELSE IS DOING IS WRONG. Duh. Rich people have assets. And they do not make the mistake of thinking that something that steals money from you regularly is an asset.

There are only 2 ways to make you home an asset.

1. Rent out your entire home, or basement, and use the rents to pay ALL of your possible costs, therefore either breaking even, or ending up with extra cash in your pocket every month. All the while you watch the value of your house rise. Now thats an Asset!

2. Purchase a condo, second home, or apt, rent it out, pay all those bills, and if you charge enough, you can have that home pay all the bills required of your current home.

I hope you now understand the difference between an asset, and a liability more clearly, and maybe even have a spark for wanting to turn your home into an asset, thus freeing you up from bills, and bring in a little more money per month for you.

It Does.

P.s - If you are interested in purchasing a piece of property, there are many books; If you are just beginning, and want some simple truths, motivation, and hope that investing in real estate is not as hard as you think it might be, check out: Robert Allen. He is a pro. He has a wonderful writing style. SImple, and powerful.

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