Real Estate as an Asset

I am reading Rich Dad, Poor Dad and have found it very enlightening.

I have been going through refinancing of my house for some time now with little success due to the new lending guidelines and therefore have found my house to be more of a liability. As a real estate agent I have long advocated a personal residence as an asset, which in the book is clearly described as a liability.

I am left to reflect on just how my real estate -- my house -- can become an asset and have come to the following conclusion:

For a personal residence to become an asset, the monthly mortgage payment cannot exceed what the house can be rented for in any given month.

For example if you house has a rental value of $1,000/month then the mortgage should be no more than $1,000 per month.

Of course this does not actually make your house an asset because it is not paying you $1,000 per month. I'm not advocating that everyone should own a multi-unit home where the rental portion pays all of the rent. Homes are an emotional purchase and a place in which most folks find peace. What I am advocating is that if the poop hits the fan, be able to rent your house for the full mortgage to get back on your feet -- and for some this may mean camping in the meantime!

Other options for turning your house into an asset include leasing out storage space if you have a large lot or multi-car garage, convert a portion of your house or garage into office space and lease that (check zoning), or grow marketable produce and/or flowers and sell them. Just a few ideas off the cuff!

If you do plan to refinance, call Jason McHann at Clear Horizon Financial Services at 406.579.3660.

Buying is consistent with May 2007

Prices have held steady over April with a 36% increase in the number of sold units and a 65% increase in pending sales. This is good news for both buyers and sellers. For buyers -- prices are holding. For sellers -- there are more house hunters out there.

My crystal ball reads that prices will hold steady through the end of this year with pockets of appreciation and depreciation throughout the valley. Buying will pick up, however, absorption will rise only slightly due to increased inventory.

As an addendum -- 40 houses sold in May 2007. Not all data has been reported yet for May 2008 so it is very likely we will hit that number this year as well.

If you are in the market to buy real estate don't wait.

Data was obtained June 3, 2008. Data will change as more listings are closed out of the system. Data is obtained by the SW MT MLS