Asset or Liability: How to Read Your Own Home

Your home is not an asset by the financial definition. It pays no rent, produces no yield, and asks for money every month instead of giving it back. Robert Kiyosaki made this case 30 years ago in a book that has since sold more than 40 million copies.

His definition was simple. An asset puts money in your pocket. A liability takes money out. By that test, the home you live in is a liability with sentimental value. The book has been argued, dismissed, and re-litigated ever since. The math has not changed.

In Cambodia, the dream home is presented as the financial finish line. Save, borrow, commit, and one day the keys are yours. Twenty-five years of installments later, the title is clean and the achievement is complete. That is the story most local investors grow up with. It is also a story that does not survive the numbers.

Why a home you live in is not an asset

Take 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 commitment is roughly USD 1,235. Over the full term, the family repays around USD 370,500 against the original USD 160,000 loan. The interest alone, around USD 210,500, exceeds what the home itself was worth on day one.

That is before holding costs. Maintenance, common-area fees, and the periodic renovations every building requires across a 25-year life cycle. None of those numbers appear on the developer's brochure. All of them appear in the bank account, year after year.

What the long-run data shows

The appreciation argument, which is usually the strongest case for buying a home, is weaker than most people assume. Robert Shiller, the Yale economist and Nobel laureate, compiled inflation-adjusted U.S. home prices going back to 1890. From 1890 to 1996, the total real return on U.S. housing was 13%. Over more than a century. That works out to roughly 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 ran between 6% and 8%, with net figures typically 1.5 to 2 percentage points lower after management fees, sinking fund contributions, vacancy, and tax. On a USD 200,000 unit, that is 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, the Canadian portfolio manager whose Common Sense Investing research reaches investors globally, distilled this comparison into what he calls the 5% rule. Take the home value, multiply by 5%, divide by 12. That is 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. On a USD 200,000 home, the threshold is USD 833 per month. If a comparable home rents for less than that, renting wins on the math, and the difference can be deployed into income-producing assets. If equivalent rent costs more, ownership starts to make sense.

The 5% threshold is calibrated to Canadian conditions. In Cambodia the math shifts with lower property tax and higher mortgage rates, but the discipline is what matters. Ownership has a real ongoing cost that does not build equity, and that cost has to be measured against the actual price of renting equivalent housing.

Where the math meets the family

The cultural weight on homeownership in Cambodia is genuine. A home is where the family gathers, where parents are honored, where the next generation grows up. None of that is wrong, and nothing in the analysis above is meant to dismiss it. The point is narrower. Emotional value is not the same as financial value. Most homeowners treat them as if they were.

When people say "my house is my biggest asset," they usually mean "my house is the largest single number on the list of things I own." That is a statement about gross exposure, not yield. By the same logic, a car is an asset, a refrigerator is an asset, a wardrobe of clothes is an asset. They are not. They are depreciating items with utility.

For the duration of the mortgage, the bank holds the security. The borrower has equity, not full title. The day the title is fully clean, the building is 25 years older than the day the family moved in. The carpark sizing is dated. The elevator is on its second replacement. The neighborhood has changed, sometimes for the better and sometimes not. The clean title arrives, and the property is harder to sell than the day the family first committed to it.

The lens, not the label

In 11 years across 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 commit the next USD 200,000 into a primary residence or into a smaller income-producing unit. Most clients have never separated those two questions before. Once they do, the answer often surprises them.

The lesson is not that nobody should ever own the home they live in. People commit to homes for many real reasons, and most of those reasons sit outside the spreadsheet. A primary residence is a lifestyle commitment and deserves to 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 deserves to be evaluated against yield, fundamentals, exit liquidity, and the cost of holding it over time.

When a liability gets called an asset, the household stops asking the questions that build wealth.

Investors who separate the lifestyle commitment from the capital commitment 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.

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