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So, is property an asset or liability? How about ‘compulsory?’

Still wondering whether a property is an asset or a liability? It can only be counted as your asset if you have fully paid for it and if you are still paying for it, then it’s an asset to the bank and a liability to you. Someone famous said that a house is an asset only if it gives you positive returns. So, if you bought a home and let it sit idle, it’s not considered an asset. Well, how about if we look at it from another perspective? It’s not a liability and it’s not an asset. To many, a home is just a necessity and owning one is compulsory.

Renting is a good option they say. Especially nowadays when the rental is even lower than the mortgage. In other words, the owner is LOSING money by renting his property to you. However, you are definitely NOT earning money by renting that property from him, okay? By paying rental, you are still LOSING that money every month. Anyone here pays rental and the rental gives you return every year? The money you used to pay rental is lost forever yeah.

Let’s look at numbers for someone who believes very strongly that he just want to work in this new city for a few years, so why bother to buy? Let’s just assume he will only stay for 5 years, okay? We also assume he wants to stay at some place comfortable, certainly not the luxury ones but at least an old condo with facilities. The price may have now reached RM450,000. The rental may have stayed at just RM1,600. This meant that owner is suffering losses every month. As for the tenant, RM1,600 x 12 x 5 years = RM96,000.

Yeah, the owner is losing money every month because his mortgage is definitely higher than RM1,600. Example below: Mortgage is RM1,819 and the maintenance fee another RM250. Thus in total RM2,069. He is losing RM469 every month. 5 years later? RM469 x 12 x 5 = RM28,140. Losing so much money… So, better rent instead? Remember yeah, the owner is technically paying just RM469 per month for a RM450,000 home… (as long as the tenant continue paying).

Now, imagine paying the rental for the next 30 years and suddenly the time to retire has arrived. What has happened to all those rental money? Gone. Meanwhile the owner would have completely paid in full for his RM450,000 condominium by then. We assume the condo price stays the SAME. This meant that the owner gained the following: RM450,000 / 30 years = RM15,000 per year.

Assuming he kept losing RM469 throughout (in other words, rental stays the same for 30 years), that’s RM469 x 12 x 30 years = RM168,840. If you were given a deal where you pay RM469 per month for 30 years and at the end of the 30-year period, you get a RM450,000 home, would you take it? 🙂 With the value of money on a downtrend due to inflation, the price will continue to rise to make up for the fall in value… This is why RM3.50 could buy you a bowl of noodle 10 years ago but you need to pay RM7 today for a bowl of noodle.

Last but not least, as a landlord, how many of you will say to your tenant that since you have paid me for the last 30 years, I will now let you stay for free for the next 20 years? As a landlord, my answer is, ‘please continue paying.’ I rest my case. This is why the debate of whether a property is an asset or liability does not make a lot of sense because a home / a roof over our head is compulsory. Cheers.

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Next suggested article: 7 things a homeowner must know before collecting your keys

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Charles Tan The Founder The Writer Kopiandproperty
Charles Tan

Charles is Founder of He writes from his investment experience for the the past 20 years in investments including property, stock, unit trust and more as well as readings and conversations with many property gurus in the industry. is an independent property blog which is not affiliated to any media company, property developer or even real estate agencies.


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