Up till recently only i realized the only condominium unit i own and rented out is still a liability instead of an asset. Why?
Simply because the monthly rental income only cover up to 95% of my monthly instalment and i still have to fork out RM200+ for maintenance fee. That come up to nearly RM300 in negative cash flow, putting my condominium in the liability category.
Well, other people or the bank might tell you it’s an asset, they are not lying to you. But it’s not the whole truth. They just didn’t mention whose asset it is. It’s the bank’s asset because you are paying the bank interest. Remember, asset put money from your pocket while liability takes money from your pocket.
Having said that, the ideal rental property will provide you positive cash flow. If let say the rental income is more than enough to cover your monthly instalment plus maintenance fee with money left, then the property will consider as a asset.
So when buying your property for rental income, you need to know in advance: how much monthly instalment, maintenance fee, etc you will need to pay every month in the future and how much you can get as rental income. As RK says; the deal is determined when you bought the property not when you sell the property, which is true in my case.