Is Your House an Asset? Let Robert Kiyosaki explain to you

[nguyenalvin]

A house is owners equity done

[sumflow]

@nguyenalvin (Reuters) The percentage of U.S. homeowners who owe more than their house is worth will nearly double to 48 percent in 2011..

[sumflow]

Do you agree that Income, and assets that throw off income to you, are assets?

Your income statement shows your financial health. Creditors want you to believe that there assets, are your assets, as they bleed off your riches. Your assets put money in your pocket. Balance sheet assets put your money, in there pockets Try not to mix them up. Non-income producing property is not an asset to your income statement. Income statement - you, balance sheet - them.

[nguyenalvin]

@sumflow lol i dont agree that a house is an asset and i don't agree that it is a liability pick up an accounting book it is an owners equity.

[sumflow]

@nguyenalvin That is true when you realize the Bank is the real owner. If you cash flow stops they will throw you out!

[sumflow]

That is if your cash flow stops, they will throw you out.

[sumflow]

Seen from a cash flow perspective, an asset is something that puts money in your pocket, and a liability is something that takes money out of your pocket.

[sumflow]

Corporations that own a lot of things, as big as GM have recently become insolvent because the stuff that they owned, taken all together on an income statement shows as an expense.

Expenses are not assets when you are trying to stay afloat. The stuff that they owned pulled them under: Things were a liability. Now the government owns GM. Those things were not assets to the company’s shareholders.

Income statements are here and now, they have a date.

[Bazza37]

Your house is definitely an asset. Future cash flows can come from owning a house as you do not have to pay rent. You can also have capital gain when you sell your house.

Whether or not an asset is difficult to sell, or requires maintenance and taxation costs is actually irrelevant to whether or not you define it as an asset.

There are many other investment assets that can either raise or decline in value and have maintenance and taxation costs.

[sumflow]

@Bazza37 Capital gain in the future will not help you if you need cash now. No matter how many things you own, when expenses exceed your income, you are in trouble.

[Bazza37]

@sumflow Irrelevant to defining if this is an asset or not. In fact quite the opposite - if you need 'cash now' then you don't invest in an asset, house or not.

[sumflow]

@Bazza37 Sorry for your loss. A mind is a terrible thing to waste.

[Bazza37]

@sumflow Ignore the substance of the argument and revert to personal insult. What a great human being you make

[sumflow]

@Bazza37 Income earning assets, places that you buy with a positive cash flow, are assets. Places that you own that take cash out of your pocket now, are a liability now.

[Bazza37]

@sumflow but, as i said, future cash flows come from not having to pay rent. So in that sense there is a positive cash flow.

Many physical investments have negative cash flows, like maintenance, but are still considered assets due to the purchasing in order to have capital gains on the investment.

[Bazza37]

@Bazza37 further it's counter-intuitive to think that you have $1million in cash, then you buy a house for $1million and in two weeks you can sell the house for $1.2million, yet we would say that it is a $1.2million liability and after buying the house you are now worth $2.2million less, despite the house increasing in value..

[sumflow]

@Bazza37 You can buy the property with a small amount down, it does not matter. If it brings in cash after all expenses, it in an income producing asset. If you have to go to work to get money from somewheres else, than it is a liability, an expense. And that is how you must place it on your income statement. If you cannot pay the full expense every month, they can come and take it away from you, and maybe keep your deposit.

[sumflow]

@Bazza37 From a cash flow basis it is cash going out ~ an expense. It is an asset to your lender, because he can sell it and get his money back. But to you it is an expense. Maybe there will be capital gains, maybe not. The future has not happen yet. Until then it is an expense with cash leaving you like rats on a sinking ship. Positive cash flow means more coming in than going out, plain and simple.

[sumflow]

Respond to this video... The trick to getting ahead is to increase your assets and reduce your liabilities.

[sumflow]

@Bazza37 A house does not put money in your pocket in the here and now. It does not show up on an income statement as an asset.

[steelnerves102]

So, where does Robert lives? Is a man who is a millionaire has a part of his house rented so that his house can be an asset?

[sumflow]

@steelnerves102 He had to move away from Hawaii so he could find cheap real estate to get income off of.

[FortNikitaBullion]

Agreed. Your #1 asset is not your house, but your health and well-being. That is what produces everything you have. Think about it.

[markbradleyvideos]

This is very interesting. Thanks for your help. I will be checking some of your videos. I believe I can have more good videos from you.