Two years ago I was with a colleague, a lawyer who is also a real estate practitioner and this topic came up for discussion, It has been şişli escort an age-long debate, the debate “Is buying a home an asset or a liability”
Today, I would like to share my thoughts on this matter Let’s start by defining the terms simply;
A home is any physical structure where you live, it may be rented or owned
An Asset is anything that increases our CASH balance
A liability is anything that decreases our CASH balance
In essence, an asset is something that puts money into your pocket while a liability is anything that takes money out of your pocket
Hence from a cash flow perspective, a home is a Liability because from purchase or construction to maintenance takes money from you.
Or is that so? Is there an alternate view on this? Read on.
One of my mentors, Robert Kiyosaki in his book RICH DAD, POOR DAD popularized this concept and I have ever since strongly held on to this until I was directly exposed to the real estate industry
Now before I enumerate my recent realizations let me state that, Robert Kiyosaki and anyone who holds that, ‘A home is a liability’ are not wrong. Objectively they are right.
But, buying a home is not entirely objective, there are strong subjective undertones and that is the
basis of my thoughts;
- Analyzing “buying a home” from a “Cashflow” only perspective is limiting and serves only accounting purposes
- Buying a home captures and holds value, the money you put in is there.
- The satisfaction, comfort, happiness, peace of mind that buying a home brings cannot be quantified, put into a balanced sheet or valued hence its impact on the homeowner is not appreciated
- Your home increases constantly in value (in compounding interest) as far as it is maintained
So in my opinion subjectively, a home is an Asset.
But if you are not still convinced, here is a hack;
Buy a home with a unit that can be rented out, so objectively and subjectively your home can remain an asset.
You can do this by buying a property with Boing Luxury Estates, we have prototypes that allow for homes with rent-able units.
Check here for our estates and make a choice.
Till next week
Have a blast!
Tags: Asset, Buying A Home, Home, Investment
