You may be surprised to hear that your home is not the investment you thought it was. When buying a home most people think that they are buying an investment. But what if I told you that this may not always be true. While the bank will view your home as an asset, you should not!
Let us look at why: Rule One. You must know the difference between an asset and a liability. Robert Kiyosaki author of “Rich Dad, Poor Dad” explains, “the primary cause of financial struggle is simply not knowing the difference between an asset and a liability.”
Ask yourself these simple questions:
1. Will this put money into my pocket? (Rents, laundry machines, signage, etc.)
2. Will this take money out of my pocket? (Need a new fence, repave the driveway, mortgage, condo fees… )
Here’s how we tell the difference between an asset and a liability: An asset is something that puts money in your pocket. A liability is something that takes money out of your pocket.
Conclusion: If you want to buy an asset, buy something that puts money into your pocket. Maybe your first home should be a duplex or triplex. Why? Because it generates revenue.
