Rich Dad Poor Dad - Do you rent or own your primary residence?

[Paul Wolfson]

For those of you who've read Rich Dad Poor Dad, I have a question. Author Robert Kiyosaki advises to own assets, not liabilities. He says that buying your own house is a liability, since cash leaves your pocket each month for the mortgage. Further, you're locking up your capital (down payment) which you could've invested used to buy an asset. His advice is that you should first acquire all the assets possible, and then when ready, you can buy your first primary residence house, using the money that came from your assets.

I fully agree with him on this, except I'm wondering if this applies to expensive/high-appreciating markets, such as LA or SF. 

Let me explain. 5 years ago, you could've bought a house somewhere in the midwest for let's say 100k. If you instead spent those 5 years acquiring investments, and bought that house today, it would cost you 125k. While 25k seems like a lot, if you buy and hold the house for 15 years, it's really not all all that much in the long-term.

However, using the same scenario in the LA or SF market, could mean a HUGE opportunity lost to buy your house as prices are growing so fast. 5 years ago, a house that cost 380k today costs 500k. 

Questions: 

1. Do you think the advice given in Rich Dad Poor Dad mentioned above applies to high-appreciating markets? 

2. Would you avoid buying a house (liability) and instead invest into assets if you live in LA or SF?

[Bill B.]

In your example you forget that the person who rented instead of buying that $100k house paid $100k in rent during those 5 years. So the renter doesn’t have the $100k to buy the house 5 years later, much less the $125k. 

How many non-rental homes do you think kiyosaki owns? Without looking I’m willing to be the number is higher than zero. 

Could you extend the same thinking to cars? Always lease? Furniture? Appliances? 

My life is busy enough without getting a 60 day notice to vacate from my landlord while I’m trying to celebrate Christmas or on vacation. 

Ps. My almost exactly 5 year example in Vegas ended August 1st. $50k down made my primary a few hundred per month less than rent. I lived there 5 years 6 months and netted $165k more than I paid. Buy a good deal. 

Pps. I moved in to one of my rentals so I can sell after 2 years with a reduced tax bill.