It depends on your game plan. - Posted by HR
Posted by HR on April 28, 2000 at 20:22:54:
I’ll admit from the start I’m a luke-warm Kiyosaki fan. I really have enjoyed his books, but Robert is a very poor public speaker and a poor book author. His ideas are great, but his articulation of his ideas stand a lot of room for improvement. (By the way, I thought his speech this year at the convention was MUCH improved over two years ago; practice makes improvement, I guess…)
Rich Dad, Poor Dad is a must read, but it is redundant, the ideas are choppy, he fails to give relevant details… One thing he also does, and it revolves around the home isn’t an asset debate, is give gross generalizations.
Now, I know what Kiyosaki is trying to do: he’s trying to shock the reader into realizing that this big purchase that they have been conditioned to believe is an “asset” is actually not one, because it drains one’s ability to invest, takes too long to pay off, etc. I agree with his thinking and the shock approach, too.
The question is: is a house always a liability? No.
Here’s a good example. A personal example. The house that my wife and I own, we rehabbed. We plunked down 15k, rehabbed the house, created 105k in equity, refied a year later (and took back the 15k for a no money down deal), and have used our 105k to fund our rehabs.
Is our house an asset? You bet it is. I puts money in my pocket. In fact, it puts FAR more money in my pocket than what I could get leveraging $1000/month in investing (Pi on the mortgage). Furthermore, when we sell this home in the next few months, it will be TAX FREE (new tax laws for a personal rez.). Thus, not only do I control a no-money down personal rez that has created over 100k in profit the last year in re deals, but when I sell it, all my 100k in equity will be TAX FREE. There is no better investment (or rei angle, imho) than the two year personal residence rehab.
That particular angle transforms the house-is-liability debate to house-is-asset. Do most folks do this? Heck no. I don’t know anyone else who is (I dont’ know why not). Nevertheless, this is not just an academic, philosphical point. It is a real niche of rei. And Kiyosaki misses it. (which is no big deal). But the folks who stridently declare that a house is always a liability are wrong.