Kiyosaki’s Conundrum
Is buying a house as a personal residence a profitable way to increase your wealth?
Best selling author Robert Kiyosaki of the popular Rich Dad Poor Dad series doesn’t think so.
While he feels that purchasing real estate investment property is one avenue to build wealth, he is not an advocate of owning your own home. (He feels it costs you money, so it is a liability rather than as asset.)
What’s your opinion?
Please post your response of success or failure of owning your own home as a vehicle for enhancing your wealth.
In a future blog, entry our team will share with you a few of our thoughts on this important subject.
Real Estate Blog
Comments
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timing is everything in real estate.
no need to buy the exact bottom or sell the exact top. take your chunk of profit out of the middle and look for the next opportunity.
great vehicle while prices are moving up. not so great when prices are falling.
good investment if you’re willing to take your profit out tax-free every 2+ years. -
You are mis-stating what Kiyosaki said. He isn’t saying NOT to buy your own home. He’s saying owning your own home should not be viewed as an investment. That’s a very important distinction. As long as your mortgage plus interest and property taxes take up 25% or less (ideally less) of your gross income, owning a house is probably a better deal than renting (unless you just absolutely hate repairs). So basically, he’s saying don’t buy more house than you can afford and then delude yourself into thinking it’s an investment.
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real estate is “local” and should be viewed within that context. a recent study in CT showed that people with median incomes can’t afford the median priced home. the study also concludes that finding affordable housing is a problem throughout the northeast. comparing the (total) cost of owning vs the cost of renting seems to be a reasonable tool to help determine when home values get out of whack and need adjusting. there will always be a premium paid for “owning”, so everyone needs to decide what is “reasonable” for themselves. buying and selling my homes at the appropriate time has been the cornerstone of my wealth building program.
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MT, RE, thanks for your input. The paradox being presented is this: According to Kiyosaki, investment real estate is a tool that makes you money, but owning your own home does not. It is my contention that buying and selling your own personal residence at the right time in the housing cycle is a tremendous investment; probably one of the best available wealth generators available to the average person. Some people in this last cycle of appreciating prices have been able to extract up to $500,000 tax free in profits from the sale of their personal residence. Sure beats working for minimum wage or dealing with tenants. Other investors who “speculated” with purchasing investment condos in previously hot markets at a possible top in the cycle have been left holding the bag. The seed for my answer is actually found within the brilliance of Kiyosaki’s own work; his rich dad often suggests using the phrase “How can I …” to empower our minds to seek solutions. So we can probably conclude that he is in agreement with the thinking of Secrets of the Millionaire Mind author T. Harv Eker that “Rich people think ‘both’. Poor people think ‘either/or'”. Let’s have our cake and eat it too!
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