I agree with Robert Kyosaki when he says that contrary to popular belief, your personal home is not an asset. Anything that pulls money out of your pocket every month is a liability. Think about it; mortgage, taxes, insurance, utilities, maintenance, these are all expenses that you are responsible for when you own a home. A true asset is something that puts money into your pocket every month, like a rental property, or a business. Society does not think this way, we are all trained to believe that our personal home is an asset, so we should borrow as much as possible to buy the best house we can afford. Our ego likes this as well therefore society has been successful in convincing us of this lie. Don’t fall into this trap!
“But I have to live somewhere” you say? That’s true, and there are expenses associated with living somewhere, whether you own, rent, or sleep in a campground.
So what is the solution!? Stop buying the biggest, nicest, newest house you can possibly afford. It’s only going to cost you money! Instead, buy a smaller, older house with a secondary suite that can help offset the cost of owning your personal home. With your extra money buy a second house to hold as a rental property. A property that puts money IN to your pocket instead of taking it out.
A lot of people love the idea of investing in real estate, and they know they should, but they can’t stand the thought of dealing with tenants and toilets. That’s ok because there are several solutions for you if you are one of those people!
1. Hire a property manager to do all the dirty work for you. Keep in mind this eats in to your profit. However, still a pretty good option for hands off real estate investing.
2. Joint Venture with an expert in the real estate investing industry. Find someone that is already investing in real estate, and deals with all the issues of rental property, and partner with them! This strategy works well because you are both owners in the property so the building will be managed well by the working partner. You, as the money partner still enjoy passive income, as well as the comfort of knowing the property is being managed well and will be taken care of without your help!
There are many more ways to invest in real estate see article “How to invest in real estate without doing all the hard work” for more strategies!
The bottom line is this: Your house is not an asset, its a liability. So go buy a smaller personal home to kep your liabilities low, and purchase an income producing asset like rental real estate as well! In a few years you will find yourself much farther ahead financially.