Positive Real Estate Professionals

A couple of days ago I came across a very interesting post by Danny Thornton. In that post he examines some of the fundamentals of how one approaches and evaluates home ownership. Oftentimes economists and personal finance professionals look only at something as either an asset or a liability. There is of course no absolute black or white when one looks at homeownership; there is the interplay of the two. I think this article quite effectively examines some fundamental questions about home ownership.

Via Danny Thornton:

I recently received a comment on one of my outside blogs that talks about a home being either a liability or an asset. They stated that a home that is currently being rented out to be an asset and a home that is used as a primary or secondary residence to be a liability. Personally, I agree and disagree.

First, lets take a look at what dictionary.com states for both liability and asset:

OK, now that we all are on the same page as to what is a liability and what is an asset, we can move forward.

Frankly, when you are buying a home, you have to look at it as an investment and not a liability. Home ownership is truly an investment into your future. It is a savings account that will either retain, gain, or lose in value based on many factors. However, if it is kept up over the years and even improved on, then more than likely, by the time that you have finished paying on the home, you will have a cash cow of an investment on your hands.

Bottom line, owning a home is owning an asset that has a liability attached to it. Once the liability matures, you have an investment that can help you retire.