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A house can be an asset or liability.

There’s no question that a house can be a valuable asset. Per data collected from Trading Economics, the rate of household owners in the united states is currently 65.4%.

But, not all homeowners’ homes are assets.

But is it always an asset? This is a question many of us will ask ourselves at some point in time.

According to Rich Dad Poor Dad, the answer is no. In his book, Robert T. Kiyosaki taught that a house can be either an asset or a liability, depending on your perspective.

Let’s take a look at what he means by this and how you can apply it to your own life!

Asset vs Liability

Before we go into depth on whether a house is an asset or liability, let’s first understand the difference between the two.

In simple terms, an asset is something that puts money in your pocket. A liability is something that takes money out of your pocket!

For example, a rental property would be considered an asset because it generates income (through rent) which goes into your pocket.

On the other hand, a primary residence would be considered a liability because it costs money (in the form of mortgage payments, insurance, taxes, etc.) to maintain and keep up.

With that being said, let’s dive into whether a house is always an asset or can sometimes be a liability…

When Is A House An Asset?

There are situations when a house can be an asset.

Let me illustrate this with a couple of examples…

  1. If you’re a landlord and rent out your properties, the houses would be considered assets because they generate income.
  2. You’re in a situation where a house can be an asset if you live in a paid-off home and have the extra cash flow to invest in things like renovations or improvements.

When Is A House A Liability?

There are also situations when a house can be more of a liability than an asset.

Typically this is the case when someone has a mortgage or is otherwise upside down on their home.

Meaning you owe more than you own!

In these situations, it can be difficult to make ends meet. The house then becomes more of a burden than anything else.

Another situation where a house might be considered a liability is if the market crashes and home values plummet.

When this happens it leaves homeowners in a very difficult position.

Especially if they need to sell but can’t get out from under their mortgage.

Asset Accumulation Mindset

If you view your house as an asset, you’re likely to treat it as such.

This means you’ll invest in it, keep it well-maintained, and make improvements that increase its value!

As a result, your house will appreciate over time and provide you with a solid return on investment.

You will also make sure that it provides passive income each month. Think about renting it out or generating income in some other way.

In this case, your house is working for you and putting money back into your pocket each month.

Get on the right track to financial success by understanding the importance of accumulating assets or turning things from liabilities into assets

Liability and No Financial Freedom

On the flip side, if you view your house as a liability, you’re much more likely to let it fall into disrepair.

You probably won’t invest much money in maintaining or improving it, and as a result, its value will decline.

The house will be a liability because the mortgage payments and general cash flow will be negative.

You will also have a difficult time ever achieving financial freedom because you’ll be stuck in this never-ending cycle of debt.

Often people will buy houses with mortgages they can’t afford just to pay it off out of their own earned income. This is a recipe for disaster and will likely lead to financial ruin.

It’s important to remember that a house is just a tool.

It can be used to achieve financial freedom or it can be a ball and chain that keeps you in debt for the rest of your life.

The choice is up to you!

Changing a Liability Into an Asset

Here is a story example of how the Rish family turned their house which was originally a liability into an asset:

After Mr. Rish read the book ‘ Rich Dad Poor Dad’, he and his wife had a change of mindset.

They realized that their house which they had been living in for years was actually a liability instead of an asset.

They decided to make some changes and turned their house into an asset!

First, they renovated their basement and began charging rent.

Second, they used that money to pay off their mortgage so that they no longer had monthly payments – pretty awesome right?

Third, when their children moved out, they decided to move to a small apartment but keep their original home for renters.

There were two vacant rooms on the main floors and bedrooms in their home, allowing for them to be rented out.

They charged another family to live there and collect additional rent money to cover more than their new living expenses at their small apartment.

The house provides income each month through the tenant’s rent and puts money into the pockets of the couple as they lived happily ever after.

By making these changes, they were able to increase the value of their house and create a passive income stream.

As a result, they achieved financial freedom and were able to retire early.

This is just one example of how changing your mindset about your house can lead to financial success.

If you’re stuck in the mindset that a house is always an asset, but it’s costing you money each month, it’s time to make a change!

Start by looking at your own situation and see how you can turn your house from a liability into an asset.

It may take some work, but it’s definitely possible to achieve financial freedom by doing so.


As you can see, there is no clear-cut answer as to whether a house is always an asset or always a liability.

It really depends on your individual circumstances.

If it is putting money into your pocket each month and increasing in value, then it is an asset.

However, if it is costing you money each month and not increasing in value, then it is a liability.

Make sure to carefully consider your own situation before making any decisions about your house!


We hope the information in this article provides valuable insights to every reader, but we are not financial advisors. When making your personal finance decisions, we recommend researching multiple sources and/or receiving advice from a licensed professional. As always, we wish you the best in your pursuit of financial independence!