Robert Kiyosaki is the author of Rich Dad Poor Dad which is the best selling personal finance book of all time. He likes to point out that a home is a liability rather than an asset.
This has always been a bit of a headscratcher for me, I know that if you listen to him or read his books, he often talks in broad strokes and it's up to you to connect the dots. The example below is from a case study of an actual home in Tulsa Oklahoma pointing out the different benefits of home ownership. Numbers will be different depending on the home and location.
I understand that if someone buys a home with little down payment and has no equity, they are like tenants with the bank as the landlord. It's not an allocation of assets in the sense of, "Will I get a better return in the stock market or investing in real estate?" The decision is whether to rent and get no return and not be able to control rent increases over time or to purchase a home to live in. It's what I call a "free investment," free in the sense that you are getting a return on costs that you are already incurring and getting no return on.
In the United States, 61% of the net worth of the average person is in the equity of their home. The average homeowner has a net worth of $195,000 while the average renter has a net worth of $5,000. (2013 Federal Reserve Study of Consumer Finances) So when one buys a home with a mortgage, you don't own the asset outright, I would say it's a combination of an asset and a liability but definitely over the long run a good investment.
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