Housing

Your home is a:

Feb 9

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  • Home: asset
    Mortgage: liability
    Feb 94
    • Is the question whether we have a mortgage on our home? Or is it a question of perception?
      Feb 9
    • OP
      The latter - I’m curious about other perspectives. And let’s assume you don’t separate the two.
      Feb 9
    • Definitely asset. I’ve gained about $100k market value on a 500k house over the past 3 years. That’s more than the past 3 years worth of mortgage payments 😄
      Feb 9
    • OP
      Nice! I have a different opinion - instead of duplication, see my below comment in one of the threads :)
      Feb 9
  • New b37
    Asset. Owned free and clear. On 45 TC!
    Feb 92
    • OP
      Are you sure? What about the expenses that comes with it? Or are you maintaining net positive cash flow from tenants
      Feb 9
    • New b37
      Am I sure? Yes, very sure, unless you take the position that no one really owns property because the government takes it if we don't pay property taxes. Bought this small 120k apartment with savings and I plan to buy a second one soon!
      Feb 9
  • Google masteratbs
    What
    Feb 93
  • New DuQvV7x
    🤦‍♂️

    Just when you thought Blind isht couldn’t get any dumber.
    Feb 100
  • Oracle not_larry
    Depends.
    Feb 90
  • New
    miguelopex

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    miguelopexmore
    Had this argument with my wife. I think from an accounting perspective it’s technically an asset but from the rich dad poor dad perspective its a liability. Rich people think in terms of cash flows. The rise in value of the house doesn’t put money in my pocket until I sell. Anything can happen until that point so until then the house you live in is taking money out of your pocket.
    Feb 94
    • New b37
      It's not the rise in value that makes it an asset; it's the face that it provides you with living space. That's money you don't have to spend on rent; money you can do what you want with.
      Feb 9
    • New
      miguelopex

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      miguelopexmore
      What does face mean?
      Feb 9
    • New
      miguelopex

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      miguelopexmore
      Fact
      Feb 9
    • New b37
      Fact, yes. Typo.
      Feb 9
  • Airo Health eooB85
    I don’t get this. Homes are only ever liability if the price goes lower than what you pay. And that even that is dependent on what time frame you look at. If it’s a home for staying, you want to look at minimum 10 years, no?

    Most areas in the US only appreciate over a 10 years period so, OP, what’s the case in which you are considering the home to be a liability?
    Feb 94
    • OP
      Interesting - I think the definitions we have are different then.

      My take is that homes are only securities that have unrealized gains or losses, just like stocks. So at that point, it’s a security.

      However, when mortgages, HOA, property tax and general maintenance fees come into the picture, your balance sheet would indicate that a home is drawing money away from you, so net negative cash flow is making your home become a liability.

      So maybe people have different opinions because people have different definitions.
      Feb 9
    • But it’s also your home, so when you do the balance sheet you should probably account for what you would be paying if you were renting a similar place
      Feb 9
    • Airo Health eooB85
      From an annual accounting perspective, a house is always a liability unless it generates income. So basically your question is whether people rent their homes or not... is that right?
      Feb 9
    • OP
      Noo definitely wasn’t my question of how people use their homes haha.

      But I think it’s clear now that people have different understandings of definitions and their personal financial statements; but I wanted to gauge it with a relative question
      Feb 9
  • Google armatu
    Home is never an asset unless you rent it out. Or sell it for profit. If you live in it, it just eats money, so it's a liability. Even if it appreciated 100x on paper, it's still a liability unless you sell it. Because tomorrow all the gain might be gone for this or that reason.
    Feb 93
    • New b37
      If you live in it, that's rent you don't have to pay. Renting from someone else is what eats money.
      Feb 9
    • Google armatu
      Even if I don't have a mortgage, I pay taxes, repairs and stuff. Asset is what earns you money and liability is what eats it. Both rent and a house you live in are liabilities. If I buy a 5k beater and not a 100k Tesla, it doesn't make my beater an asset because I "saved" on Tesla.
      Feb 9
    • New b37
      If your beater car sits in the garage consuming space while you pay annual tax to own it, it's a liability. If it takes you to work every day and saves you money on train fare, it's an asset even if it has running costs.
      Feb 9
  • New
    nfs

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    nfsmore
    It's an asset as:
    1. mortgage is usually cheaper than rent even with maintenance and it goes back to you (partially) once you sell the property.
    2. prices always goes up on the long term, even if markets crash for a few years (i just made ~250k usd in 3 years).
    3. When you buy a property, you "pin" your position in the market, so whether prices go up or down, you can still afford to buy a another equivalent property (in terms of location, size and quality) at the same price as your own.
    4. If you die, your partner/kids/parents get a house for free (excluding taxes).

    Disclaimer: there's always risks with any decision you make, you can buy a place that's rotten from the foundations and need to invest a lot to fix it. that's why you need to make sure you purchase a place that will not only be good for you to live in, but also easy for you to sell.
    Feb 100
  • New b37
    I'm just now noticing that the OP's bias was clear from the question; only one of the answers is grammatically correct. The wrong answer, as it turns out, so hopefully we can convince OP otherwise.
    Feb 101
    • OP
      No bias intended, people have the freedom to choose based on their own understandings
      Feb 10

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