1130: Don't Buy a House, Do This Instead - Episode 1130
Investing in Real Estate with Clayton Morris | Investing for Beginners
Clayton Morris
4.4 • 1.1K Ratings
🗓️ 13 February 2025
⏱️ 10 minutes
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Summary
Today, we're going to have an important conversation on performing assets -- and where buying a home fits into the equation. You'll learn about assets, liabilities, and why you may want to put off buying a primary residence for now. I'm also sharing a few ways to convert your home into a performing asset. Don't miss this episode of Investing in Real Estate!
Transcript
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| 0:00.0 | Stop. Do not buy a house. Do this instead. As rates continue to drop below 7%. More and more home buyers are trying to enter the market right now. There's nothing inherently wrong, of course, with buying a home to live in. I've done it. But there's one thing a lot of home |
| 0:21.2 | buyers seem to overlook. A primary residence is not a performing asset. Okay, I repeat, |
| 0:27.9 | primary residence where you live is not a performing asset. Let's talk about a little bit more |
| 0:34.3 | about what this means here. Okay, in general, when you make a large purchase, |
| 0:37.8 | it's either going to be an asset or a liability. A liability is something that you owe someone else. |
| 0:42.6 | It takes money out of your pocket every month. Let me give you some examples. Your car loan, |
| 0:47.9 | credit card debt, student loans, right? Assets, on the other hand, are things that you own that have |
| 0:53.0 | a cash value, your savings account, |
| 0:55.1 | your 401k, your cars. But there's another important subcategory that you should consider here, |
| 1:00.7 | performing assets. Now, a performing asset is a type of asset that produces cash flow that you |
| 1:05.9 | can use to finance your daily life. And whenever I talk about this, people get confused, they get angry, |
| 1:13.1 | and they don't understand really where their home falls into this categorization, right? |
| 1:18.2 | After all, most of us have been taught that buying a home is the pinnacle of success in the United |
| 1:23.3 | States. And I'll agree, I will agree that a home can be a solid asset, right, since it appreciates |
| 1:29.2 | year after year. It sure does. But it's still not a performing asset, unless, of course, |
| 1:34.2 | you're living in like a duplex and you own one side of it, or you own both, you own the whole |
| 1:38.8 | duplex, you live in one side and you rent out the other side. That's different. Tucking a single |
| 1:43.2 | family home, most cases your home doesn't produce cash flow for you. In fact, it probably takes money out of |
| 1:48.9 | your pocket every month due to your mortgage, your taxes, property repairs. We're doing fixes on |
| 1:55.1 | a property right now and the gardener is going to charge us $2,000 if it fixed this pump thing |
| 2:00.8 | and the, yeah. So again, you're |
| 2:02.3 | paying for it constantly. So what if instead of sinking your funds into a home, you could buy a |
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