Why House is not an asset

Have you heard that your friends or older said that you must buy house? They said it will become your future assets. Is it really true? If you read ‘Rich Dad Poor Dad’ book, Robert T Kiyosaki has said that house is a liability. When I read the statement it is making me confuse because I’ve gets the statement of house as an asset and best investment of the future. And as a government servant that working in housing department, I’m not agree at first but after do some research I know why he said at the book.

In this entry, I’ll give some reason about thy house is not an asset:-

1. If your housing can’t generate income and just make your money out so it is can’t become asset.  If you read the definition of asset, it show that it represent value that can be converted into cash.  So, does your house bring money for you? If your house just as your living place so it is a liabilities.

2. How can you claim house it your house if you buy using housing loan? You still don’t own the house. Your bank still has grant and ownership.  Even you rent the house but the money just using to paid the loan and not for your income. I’m feeling weird when there’s many people renovated their house even before they fully own the house.  I’m not saying that you can’t renovate the house but make it minimally. I’ve experience that many people change drastically their house.

 

3. Maybe they have more money but it is more worthy to settle the loan than using to renovate like to buy other’s house. Wait after you really own the house and you can renovate. I’ve sad when there’s many houses being auctioned when see the house. There are really beautiful and I know it is not a little money has been throw.

4. Own the house but don’t sell or rent it. There’s many people trapped after being advices some of the broker/seller that the house is good prospect. After sell it, the new owners don’t know how to rent or sell it. They just don’t have any knowledge about properties but want to do it. It will make him a huge loss. So, learn before you want to join in real estate business.

5. Many people said that house price won’t be drop but that’s not really true. If I’m not wrong, there’s a drop price of housing in US this year. It will be same for other’s country.

That’s a simple reason why house can’t be an asset but there’s also a condition that your house can be an asset such as :-

 

  1. You buy house in cash and rent it. It is hard to buy house in cash if you not really rich but it is possible.   After own the house, not waiting to get renter. Try as fast as possible to make your house to generated income.  To get profit, rent it for short time and sell it. If you lucky, the price will be increase in the future.
  2. Buy it at lowest price and sell it quickly. Maybe it sound weird but it can be done if you buy 2nd house from people that needed quick money. You can get lowest offer from them. But don’t just buy it. Found the reason why he/she want to sell at the lower price. Maybe the house is haunted or being aimed by loan shark.

 

Okay, that’s all for today. If you have any other’s opinion, justs share at the comment below.

 

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