Comments on: Your House: Asset or Liability?

By: n1kk1andy

n1kk1andy — Wed, 05 May 2010 01:23:42 +0000

I remember reading “Rich dad , Poor Dad” a few years ago. The book leads you to believe that having liabilities are bad, you need to have assets. This of course is the end game/plan, you want to have assets (e.g., houses paid for in full, or houses generating equal or more income to cover expenses associated with owing it).

I have learnt that if starting small ( i.e, with little or no money) having a house as a liability is not that bad. If the liability (the house) eventually starts paying for itself through rental income.

So, don’t get upset your house is a liability if it incurs and expense to you. The end game is to have it become an assets, that is creating wealth for you.

By: Tyrone Solee

Tyrone Solee — Wed, 18 Feb 2009 00:32:27 +0000

Hi, I have made the same article on my blog and this is one of my most commented article. You will be surprised by the various comments that my readers gave. Great thoughts there and they have proven somehow that not all Kiyosaki teachings are correct.

By: Sean

Sean — Fri, 17 Mar 2006 08:46:02 +0000

This line of thought (house being a liability) drives me absolutely batty every time I stumble across it. Your house is not a liability; your mortgage is a liability. An asset isn’t necessarily a money generating piece of property…

By: mbhunter

mbhunter — Thu, 16 Mar 2006 10:39:35 +0000

I side with Kiyosaki on this one. My home is a liability because it costs me money. A rental with a positive cash flow is an asset. I don’t even consider my equity in my net worth.

By: RS

RS — Wed, 15 Mar 2006 22:16:02 +0000

I agree that your home should be considered a liability…as long as I am paying my mortgage every month, then it is a liability to my cash flow.

By: Steve Mertz

Steve Mertz — Wed, 15 Mar 2006 21:31:48 +0000

I’m a huge believer in owning real estate (your home) as well as rental properties-if that’s what you want. But…until that house is generating some cash flow it can sure give people a sense of false security.

By: Flexo

Flexo — Wed, 15 Mar 2006 21:16:57 +0000

Thanks for the clarification, Shaun. I think the distinction between owning a home with or without a mortgage and owning a home that produces net income may be overlooked by the less astute. I’m not familiar enough with Kiyosaki’s writings but I do see how they are interpreted by individuals who follow him.

By: Brian

Brian — Wed, 15 Mar 2006 21:14:37 +0000

I read your blog on a regular basis and it’s quite good. This is more of an FYI than anything else, but regarding the “gurus” out there, have you seen this site:

http://www.johntreed.com/Reedgururating.html

Many of the so called gurus are nothing more than shiesters who make money from books and not doing whatever it is they say will make you a gazillionaire.

Hopefully everyone is at least aware of both sides of the stories. The page above does go into factual detail and not just hearsay type comments (e.g. “This guy is a crook”). John T. Reed presents actual facts on each of the people in question and gives them his own “rating.” Read up and decide for yourself.

By: Shaun

Shaun — Wed, 15 Mar 2006 20:35:29 +0000

If you actually read any of Kiyosaki’s stuff, you’ll see he does not state your residence is an asset. In fact, he makes it quite clear that your home is a liability. This is because it takes money out of your pocket (taxes, maintenance, etc.) instead of putting money into your pocket. Only income producing real estate such as a rental property is considered an asset by Kiyosaki.

By: SingleMom

SingleMom — Wed, 15 Mar 2006 19:51:01 +0000

I view the concept of getting rich from real estate via rental properties and passive income (asset), not from building equity via your primary residence (liability – if still paying mortgage).