Your House is Never an Asset

house is never an asset
Ten years ago, I started to self-educate myself on real estate. The first book I read was Robert Kiyosaki’s “Rich Dad, Poor Dad” in which he shocked me when he said “your house is never an asset.” At first it was very hard to comprehend because we’ve always been told about the great American dream of “owning your own home” and that “your home is your biggest asset”. But Robert drilled the point that an asset is something that puts money into your pocket without having to do any work. Your house is your home; and while it’s providing a very important function, it isn’t providing income every month. Neither is your car, boat, etc. Once I understood this concept of an asset, I started looking at investing very differently.

house is never an assetThe kind of asset Robert wanted us to learn about would create passive income generated almost effortlessly. It may be harder to obtain than active income, but it’s well worth putting in the extra time and effort to setup; once it starts, the Return on Investment (ROI) will only grow and you can go on to focus on the next asset.

There are many ways to create passive income. You can open an online store, setup an affiliate marketing site, invest in high-dividend stocks, start a new business (that doesn’t require you to be there to make money), or buy investment real estate. The most tried and true method will always be real estate.

house is never an assetThere is a famous saying in the profession, “I don’t wait to buy real estate; I buy real estate and wait.” Investors who follow this mantra are the most successful. Robert also mentioned to never sell real estate; but if you do have to sell, it would be to buy more property, not a bigger property. Many households never see passive income from real estate because they upgrade ever 5-10 years. They sell their condo to upgrade to a small home and then they turnover their small home to upgrade to a larger home. They fall into the trap of an endless mortgage; and while they are building equity, they never obtain passive income.
A lot of folks shy away when they hear “investment real estate.” They think they need a lot of money. What if I told you there are properties in this country near well- known cities (Phoenix, Cleveland, Chicago, etc.) that can be bought for as little as $45,000 to yield a net ROI of 7-12%. After all expenses (management fees, taxes, utilities, insurance, vacancy and maintenance reserve) you would still reap about $500 per month or $6,000 a year in passive income. If you buy one of these properties every three years, in 21 years you would have 7 properties bringing in about $42k a year to supplement your existing income, social security, 401k, etc.
We hope you have found this blog post on real estate investing to be useful. Feel free to comment below or email us with any questions.

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