Is a real estate really an asset? Or is it because all our lives we been told it is an asset hence we would just naturally assume it is.
I just bought an apartment for a million dollars with my fiancee. Needless to say, since we are average working couple, we took a mortgage loan for 80% of the amount and we would need to finance the loan for 30 years. Being in Singapore with the limited amount of land we have, housing prices has been increasing year by year. The government has made efforts to control the prices but there is a limit to how much it can be done.
I couldn’t help but think of why are we always told we need to buy a house. We have always been told a house is an asset and always better to own one.
But seriously...is it really true!! Somehow when I signed the sales purchase, it gives me the feeling I am in a big debt for the next 30 years. It feels good since I own the asset, but is it actually worth it putting myself in a big hole..
Come to think about it, I might have been able to save more if I rented. But of course, because the scarcity of land, we were told land prices will always go up. But when I think about it, there will be a limit to what we can pay for. It’s not like we are earning big bucks.
Robert Kiyosaki kind of sums it up nicely in his Rich Dad, Poor Dad book:
Your financial planner, real estate agent, and accountant all call your house an asset. But in reality, an asset is only something that puts money in your pocket. If you have a house that you rent out to tenants, then it’s an asset. If you have a house, paid for or not, that you live in, then it can’t be an asset. Instead of putting money in your pocket, it takes money out of your pocket.
That is the simple definition of a liability.
This is doubly true if you don’t own your home yet. Then it’s the bank’s asset, and it is working for them, but it’s not earning you anything.
Well in any case, I have signed on the sales purchase so can’t be reversible. Guess I must work my butt off for the next 30 years. So what do you guys think, is having a house, a boom or bust? Is it just a scheme to get us in debt so we will forever work? Do share what is the real estate situation like in your country. Do you purchase it or rent?
