Monopoly

Monopoly

A game about wealth is the famous one most of us have played.  It’s not far from the reality of which assets many wealthy people have, as far as the real estate ownership.

Houses, hotels, and other real properties are part of the portfolio of the wealthy.  Your home is an asset, but not usually a performing asset.  If you have a mortgage on it and you stop making payments, you won’t have it for long.  It becomes a huge liability and for years, if it is foreclosed on.

Real Estate

If you own a rental property and take care of it and keep tenants happy, even if you have a mortgage, it can be an asset.  Robert Kiyosaki said that “there are two kinds of debt: the kind that eats you and the kind that feeds you”.  Having a mortgage on a rental property doesn’t have to be “bad debt”.

Positive cash flow to the extent that even with maintenance, repairs, and vacancies are less than the profit after the mortgage payment + all expenses can make for the beginning of wealth.  The value is depreciated even though the value may be rising.  A licensed CPA can explain this in detail.

People tend to make fun of things they don’t understand.  I’ve heard of some criticism of Robert Kiyosaki but I’ve hear much more praise of the man.  He didn’t have to share anything with anyone but he did.  I found it to be useful and helpful.  Look up his net worth, if you have something critical to say about him.  What did he know that others don’t?  Money doesn’t magically appear in the bank, you know.