Why Your Home is Not an Asset: A Financial Perspective

Theavy Chea
May 23
5 min read

Updated: Jun 19

Your home is not an asset by financial definition. It pays no rent, produces no yield, and requires monthly payments instead of generating income. Robert Kiyosaki made this argument 30 years ago in a book that has sold over 40 million copies.

His definition is straightforward. An asset puts money in your pocket. A liability takes money out. By this test, the home you live in is a liability with sentimental value. This book has been debated and re-examined ever since. Yet, the math remains unchanged.

In Cambodia, the dream home is often viewed as the financial finish line. Save, borrow, commit, and eventually, the keys are yours. After 25 years of payments, the title is clean, and the achievement is complete. This narrative is common among local investors. However, it does not hold up against the numbers.

Why a Home You Live In is Not an Asset

Consider a typical scenario in Phnom Penh. A family commits to a USD 200,000 home on a 25-year mortgage at 8% interest, with USD 40,000 down. The monthly payment is approximately USD 1,235. Over the full term, the family repays about USD 370,500 against the original USD 160,000 loan. The interest alone, around USD 210,500, exceeds the home's initial value.

This calculation does not include holding costs. Maintenance, common-area fees, and periodic renovations are necessary over a 25-year life cycle. None of these costs appear on the developer's brochure. Yet, they impact the bank account year after year.

What the Long-Run Data Shows

The appreciation argument, often the strongest case for homeownership, is weaker than many assume. Robert Shiller, a Yale economist and Nobel laureate, compiled inflation-adjusted U.S. home prices dating back to 1890. From 1890 to 1996, the total real return on U.S. housing was just 13%. That averages to about 0.1% per year above inflation.

On average, housing kept pace with the cost of living. It did not build wealth. The wealth came from leverage and forced saving, not from the asset itself.

Meanwhile, the same USD 200,000 directed toward an income-producing condo in a credible Phnom Penh building generates real yield. Gross rental yields in well-located projects through 2025 range between 6% and 8%. After management fees, sinking fund contributions, vacancy, and tax, net figures are typically 1.5 to 2 percentage points lower. For a USD 200,000 unit, that translates to USD 12,000 to USD 16,000 in annual gross rent. One scenario produces a paid-off house. The other produces a paid-off house and a portfolio.

The 5% Test

Ben Felix, a Canadian portfolio manager, distilled this comparison into what he calls the 5% rule. Take the home value, multiply by 5%, and divide by 12. This gives the monthly cost of ownership that builds no equity: property tax, maintenance, and the opportunity cost of capital tied up in a non-yielding asset. For a USD 200,000 home, the threshold is USD 833 per month. If a comparable home rents for less than that, renting is the better financial choice. The difference can be invested in income-generating assets. If equivalent rent costs more, ownership starts to make sense.

The 5% threshold is calibrated to Canadian conditions. In Cambodia, the math shifts due to lower property tax and higher mortgage rates. However, the discipline of this analysis is crucial. Ownership incurs real ongoing costs that do not build equity. These costs must be measured against the actual price of renting equivalent housing.

Where the Math Meets the Family

The cultural weight of homeownership in Cambodia is significant. A home is where families gather, where parents are honored, and where the next generation grows up. None of this is wrong, and nothing in the analysis above dismisses it. The point is narrower. Emotional value is not the same as financial value. Most homeowners conflate the two.

When people say, "my house is my biggest asset," they often mean "my house is the largest single number on my list of possessions." This statement reflects gross exposure, not yield. By the same logic, a car is an asset, a refrigerator is an asset, and a wardrobe of clothes is an asset. They are not. They are depreciating items with utility.

During the mortgage period, the bank holds the security. The borrower has equity, not full title. By the time the title is fully clean, the building is 25 years older than when the family moved in. The car park size may be outdated. The elevator may have been replaced twice. The neighborhood may have changed, sometimes for the better and sometimes not. The clean title arrives, and the property is often harder to sell than when the family first committed to it.

The Lens, Not the Label

In my 11 years in Cambodia's market, the most common conversation with new clients at My First Corner is not about which development to choose. It is about whether to invest the next USD 200,000 into a primary residence or a smaller income-producing unit. Most clients have never separated these two questions before. Once they do, the answer often surprises them.

The lesson is not that no one should ever own the home they live in. People commit to homes for many valid reasons, and most of those reasons lie outside the spreadsheet. A primary residence is a lifestyle commitment and should be evaluated against lifestyle criteria: space, schools, family proximity, and the next 25 years of personal life. An investment property is a capital commitment and should be evaluated against yield, fundamentals, exit liquidity, and the cost of holding it over time.

When a liability is labeled as an asset, households stop asking the questions that build wealth.

Investors who distinguish between lifestyle and capital commitments before signing anything tend to make better decisions about both. The work done at this stage rarely feels urgent, and that is precisely why it pays off.

At My First Corner, this is the analysis we run before a client commits to the next two hundred thousand dollars in any direction. The conversation is available when it is useful.

Conclusion: The Path Forward

Understanding the distinction between a home and an investment property is crucial. It can lead to smarter financial decisions. By recognizing the realities of homeownership, I can make informed choices that align with my financial goals.

Investing in Cambodia's real estate market offers opportunities for high returns. It is essential to approach these decisions with clarity and a focus on yield. This mindset can transform how I view property ownership and investment.