After reading the book of the millionaire real estate investor by Gary Keller, where it says to track your net worth frequently, I started few months ago to track my net worth and see it how it performs during time. I must say that I got really obsessed with this, and try to improve constantly the rate of increase with a combination of control my personal spending and getting the most out of my real estate endeavors and investments. I created a excel sheet where I insert data and it shows also a graph. I'm sure I can make it a lot more complex, but its not something I need right now. Because I moved to the states beginning of 2013 and know exactly how much capital I brought with me and with combination of the monthly bank statements I was able to use approximate numbers to have a historical view. It fascinated to see the history... I use Mint where I have logged in all my assets and liabilities and it calculates most of this automatically. Market value of my real estate and personal notes I calculate my self, everything else it gets the data automatically. For budget watch I prefer using my banks online system (wells fargo) Currently I see an average increase of approximately 1.1% monthly and so far it looks that it increases as time goes by and I leverage my capital more. After I file my taxes next year I should have a better view of things. Anyone else has this habit and how much increase have you seen with your REI?

Your comments crack me up sometimes. The other day you were advocating mortgage fraud and now you are saying net worth is worthless? So in the future when you've maxed out your conventional loans and go to a portfolio lender for a loan, are they going to care that your assets cash flow $300 per month or that you have a net worth of $500k? What's going to make them open their checkbook to you? Your net worth is essentially your financial report card and it indicates your financial health. You can make a ton, but be worth nothing. Additionally, when reviewing it over time you can see trends that will show you the realities of where you stand financially. Ideally your net worth will be trending upwards over time, and if it isn't, tracking it will provide you with a real wake up call. When you hit retirement and decide to tap into your retirement savings to live, what do you think happens to your net worth? It goes down. If you don't have much of a net worth, you don't have much to tap into. It would be pretty awful to surprisingly learn that your net worth won't get you through retirement. That said I look at my net worth on a monthly basis. It is the most important financial figure for your "personal books" and it is critical that you track it. I don't think any successful guy will tell you otherwise. Maybe @Serge S. can chime in here.

I really want to be a smart a$$ and call out those, who said the net worth figure is worthless, are clueless. Maybe they don't have anything to track. If you're in the money borrowing business, especially commercial loans, you will know how important your PFS is. Banks are in the busines of making loans. They don't want your properties. They want to be paid back with interest. The more solid your PFS, the cheaper you can borrow. In the spirit of competition, your net worth is your score card. People in the Silicon Valley are busting their behind trying to make $250k/year. My goal is to increase my net worth by at least $250k/year. It's quite easy to accomplish this goal when you own real estate in the Bay Area. One or two deals with built-in equity and you're there. If you can consistently generate $1,250/month of positive cash flow each year in the Bay Area, there's a high probability that you'd have $250k tax-free money to spend each year. If you control a $10MM real estate portfolio, your net worth is increasing at $500k/year at an average 5% annual appreciation. This is not even taking into account the principal pay down and positive cash flow from your portfolio. No wonder why people say this is the land of opportunity. May I say "FREEDOM........." :>)

Nick my reasoning is firstly that you cannot correct what you dont measure. So I guess besides the calculation of the performance of an individual investment, net worth gives the bigger picture. Its not how much you make, its how much you have on your asset column. That's what will give you ultimately your financial freedom, right? Second it gives me motivation and helps me be patient. Buy and hold investing is soooo slow, to the point its boring, so with this way I try giving some sort of interest.

By what catalogues companies send my wife.

I have used a spreadsheet since I graduated college too. We lost some data in the early years after our property was robbed, but we still have data since mid 2004. Right now we average a .53% increase each week. We track things weekly. For those that claim net worth is irrelevant I don't agree. For sustainable financial independence you need roughly 4% of your total net worth to exceed your annual spending. I think most people on this site would agree that financial independence is a pretty decent goal worthy of pursuing. The oft-cited $10k/month goal requires a $3M net worth using publicly-traded securities in a modest balance. I am sure most on this site could generate the same with less equity to play with. Reducing your spending decreases your net worth requirements 25:1. So every dollar you reduce your annual spending saves you from accumulating 25 extra dollars for financial independence. That's something worth thinking about for those trying to get there sooner. In general I have found that all of the canned solutions fail to give me all of the data I need. They're generally not built for real estate and when you own private companies it gets very hard to assign precise values. I track my stuff religiously now because we seek spec loans pretty frequently. The spreadsheet spits out a PFS in real time and generally gives the bank a warm-fuzzy that we are on top of our finances.

I usually do on my left hand, but when I get paid I use my right also.. maybe some toes if I'm lucky. :-) But then the bills come in and I'm back to just the left..j/k

@Pavlos Kasselouris, my husband checks it every day. He thinks of it as a game - how much can I make it go up by tomorrow? We use Personal Capital, which is better for keeping track of investments. Mint is great for keeping track of spending.

"A watched pot never boils..." :)

Do you track your NET WORTH?

Pavlos Kasselouris

OP

Project Engineer · Miami Beach, FL · Member since 2015 · 203 posts · 64 votes

11y

Originally posted by @Chris Stromdahl:

Just did.

Check out Mint.com

The best.

Awesome! Good to know this post reached at least one person, makes me feel great!

Personally now that I saw a ton of investors having and actively using a personal financial statement with their lenders, I will start one as well to log in all in a cool excel spread sheet, that will so historically from day one actual numbers that each property perfomed in one place. I do have Income and expense reports from every property so it wont be that hard to gather the data.

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Sylvia B.

Rental Property Investor · Douglas County, MO · Member since 2014 · 1k+ posts · 1k+ votes

11y

Originally posted by @Andrey Y.:

Another example, lets say you drove 6 miles in a business related way. You have to pull out a notepad, write the nature of the business, mileage, etc. down. Now, even if that took a minute, and for simplicity sake say your time to you is worth $60/hour, thats $1 of time you just wasted. The IRS wont give you back $1 for those 6 miles you spent 1 minute writing off. In fact, it won't even be 10 cents.

Actually, it's $3.45 - 57.5¢/mile

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Allen Clark

Investor · Seattle, WA · Member since 2015 · 100 posts · 59 votes

11y

I started tracking net worth monthly once I was heading for divorce. I really needed to know precisely where my finances were and the trend line. I find net worth to be a decent measure of that. Having been more settled for a few years I still track it monthly. It does not take long to do it and I just keep the figures on a spreadsheet on Microsoft's Onedrive site.

0 Reply

Jerry W.Pro Member

Moderator

Investor · Thermopolis, WY · Member since 2012 · 4k+ posts · 4k+ votes

11y

I don't track it. I have to fill out a personal financial statement every year for the banks. I hate it. It is rare to have less than a 10 hour day even on weekends. When I need a loan I call the banker and show him the figures on the deal. When the day comes they say no loan I will go to plan B. It takes me half a day to do the stupid financial statement. When you have a day job that takes 50 hours a week, and you invest on the side, you really miss the time spent doing the financial statement. When cash flow is enough to leave my day job maybe I won't mind the time to figure net worth. I have a lot of other things that need done. I do have a way to track how much I owe to banks. My milestones were not net worth. They paying off my principal residence, then paying off my car loan, then paying off my office loan, then paying off credit card debt every month. It has been a long hard climb. I concentrate on acquiring properties, fixing them up and renting them. When I need money to put 20% down I look for equity in a property to use for that. Net worth is nice, but counting your money just to count it holds little appeal when I need to go put a roof on a house.

1 Reply

Account Closed

Investor · San Jose, CA · Member since 2012 · 2k+ posts · 3k+ votes

11y

@James Park,

Feel free to be a smart azz anytime. I really don't mind. I believe @Ezra Nugroho was the one that gave me that cool nick name. I have never watched Star Wars so I didn't even know who Yoda was. I'll accept it as a compliment. :>)

Not being disrespectful to your friend, but I believe he invested without fundamental. For a house to withstand an earthquake, a tornado or a hurricane, the foundation and the framing have to be sturdy. It was a house of cards with NINJA loans during those years so I'm not surprised your friend lost everything during the mortgage meltdown. I have witness several friends, who lost all of their rentals as well as their million dollar homes. Ironically, one man's misfortune is another man's opportunity. Wealth transfer happens in recessions. Only those, who recognize it, can capitalize on it.

It's not a matter of if, but when the NASDAQ will drop 30%-50%. Wealth transfer happens when the market drops. If history is any indication, we should have 2 more up years before the decline. Housing in C and D neighborhoods would take a bigger beating compared to A and B neighborhoods. The overall housing market correction would likely be 20%-25%.

Unlike others, I don't believe my market is the Holy Grail. History has shown that my market typically goes down for 4 years and up 7 years. Buying right, even at this time, would reduce one's downside risk. If history is any indication, 5-7% annual drop will happen in the coming years. Investing is about probability. Knowing one's history would help reduce the risk significantly. However, be assure that the market would likely double itself again in the next 7 years. Of course, if history is any indication.

Betting against the market has significant consequences. It can help you get ahead, but it can break you if you're wrong. If history is any indication, the odds are against individuals who bet against it.

Actually, my goal is not about appreciation. It's about acquiring assets at a discount, which adds equity to my net worth. Each asset has to be able to carry its own weight and break even at 30% vacancy. I have shared the details of these deals at BP meetups with others. It's not easy to get them, but it's nice once they're added to your portfolio. To me, it's easier to get these discount deals in your backyard compared to someone else's backyard. The $500k appreciation above was just for illustrating purposes. It has been a great year. I'm ahead of my goal by a couple miles. You can say I'm smiling all the way to the bank. :^)

To answer the OP's question, I only track/look at my net worth whenever I add a deal to my portfolio. Otherwise, I do it in January of each year.

2 Reply

Andrey Y.

Specialist · Honolulu, HI · Member since 2014 · 1k+ posts · 1k+ votes

11y

Originally posted by @Sylvia B.:

Originally posted by @Andrey Y.:

Another example, lets say you drove 6 miles in a business related way. You have to pull out a notepad, write the nature of the business, mileage, etc. down. Now, even if that took a minute, and for simplicity sake say your time to you is worth $60/hour, thats $1 of time you just wasted. The IRS wont give you back $1 for those 6 miles you spent 1 minute writing off. In fact, it won't even be 10 cents.

Actually, it's $3.45 - 57.5¢/mile

That's not $3.45 taken off of your AGI, so the IRS does not "give you" $3.45, its more like 15% (thanks to Obama) of that when you really look at it ;) That is 51 cents. Best case scenario. Say I earn $100/hour in my day job, that means I am valuing my time at 1/4 or 1/5 of its really worth, if I waste a minute of my time writing the expense down, and don't forget the many minutes spent tallying those expenses when it comes tax time, or getting the data to your tax professional (again many minutes).

Those 5 miles your drove for that business/REIA meeting that NETTED you less than 50 cents in the real world, but took probably 2 minutes out of your life to write down then tally come tax time. Is your time worth $15.00/hour? Not if you earn more than that.

0 Reply

Josh Braun

Investor · Nashville & Chattanooga, TN · Member since 2015 · 182 posts · 138 votes

11y

I use Excel to create a monthly income statement, balance sheet and cash flow statement. Inside there I track net worth and change over time (year over year, month over month). Sure, it is time consuming to do this, but the more you manage your money, the more money you have to manage.

0 Reply

John HornerPro Member

Flipper/Rehabber · Columbus, OH · Member since 2013 · 1k+ posts · 655 votes

11y

I've been tracking my net worth monthly since I got married almost 5 years ago. We started of negative when we both graduation college.

I don't think it has too be your focus but you need to know where you are. I think a lot of people in this country get so far into debt because they never do the math to realize they have a negative net worth and owe more then they make.

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Todd G.

Investor · West Richland, WA · Member since 2011 · 10 posts · 4 votes

11y

Since you read the MREI by Gary Keller, don't you think he makes a clear-enough argument FOR tracking your net worth?

Yes. We track our net worth & have been doing so for ~ 4 years now.

T&S

0 Reply

James Park

Real Estate Broker · Johns Creek, GA · Member since 2009 · 870 posts · 664 votes

11y

1 Reply

Jon Klaus

Developer · Garland, TX · Member since 2008 · 8k+ posts · 4k+ votes

11y

The bank wants an updated personal financial statement for each new loan, so I update then. I also update after I sell a property.

A PFS is your balance sheet. What business wouldn't monitor and manage its balance sheet? When it's rock solid, banks fall over themselves for your business.

2 Reply

Pavlos Kasselouris

OP

Project Engineer · Miami Beach, FL · Member since 2015 · 203 posts · 64 votes

11y

Originally posted by @Jon Klaus:

The bank wants an updated personal financial statement for each new loan, so I update then. I also update after I sell a property.

A PFS is your balance sheet. What business wouldn't monitor and manage its balance sheet? When it's rock solid, banks fall over themselves for your business.

Is there a reason when I went to refi a property and they created a PFS according to my last years tax return?

0 Reply

Jon Klaus

Developer · Garland, TX · Member since 2008 · 8k+ posts · 4k+ votes

11y

Originally posted by @Pavlos Kasselouris:

Originally posted by @Jon Klaus:

The bank wants an updated personal financial statement for each new loan, so I update then. I also update after I sell a property.

A PFS is your balance sheet. What business wouldn't monitor and manage its balance sheet? When it's rock solid, banks fall over themselves for your business.

Is there a reason when I went to refi a property and they created a PFS according to my last years tax return?

Yes, they want to know your assets, liabilities, liquidity, and net worth. But they can't see all that from your tax returns.

1 Reply

Account Closed

Investor · Honolulu, HI · Member since 2013 · 3k+ posts · 1k+ votes

11y

Well no one calls me Yoda but I'm not Jar Jar Binks either. I think of myself as R2-D2. There from the beginning and humming along.

I track my net worth monthly with the bills. BOA has My Portfolio that links your accounts and calculated your net worth. Unfortunately a lot of my accounts made it more difficult for them to access the accounts so it's mostly done manually in excel by me.

Real estate values are usually adjusted annually and then only what I think the stabilized value is.

Cash is generally ballparked and adjusted annually. Excess at this stage is spent.

@James Park I'll add some info about SF market. Since at least the 70's the values typically double in every 10 years and then lose 10%. Industries come and go. The physical Bay Area is desirable. For every million dollar sale there were probably 10 people that offered similar but didn't look as solid to close.

If the tech demand softens there are media/biotech/tourism/financial/Korean etc. people waiting in the wings.

Also the Bay Area market is misleading. Usually it includes 9 counties. The stats from that area will be markedly different from SF county. And within that area you have different subsets such as Nob Hill and Bayview. A rising tide raised all boats but if your boat has a small leak...

The best way is to look at each NHBD and the property type you are investing in. I have no problem paying market in good areas but even then I look for properties that I think will have demand even if the demand dropped 50%.

Now @Minh Le & @Amit M. & @J Martin and others work to value add from the beginning so that the small dips have little effect on their net worth but they are young so a little hard work won't hurt them but how smart to be working this great market!

2 Reply

Account Closed

Investor · San Jose, CA · Member since 2012 · 2k+ posts · 3k+ votes

11y

@James Park,

Since real estate is local, the mentioned 20-25% correction is about my market here. I'm not concerned about the baby boomers retiring impacting our economy. However, China could likely be the cause for our next recession.

If history is any guidance, my market should have another 15-20% upside potential from here. Something that currently sells for $100k has the potential to go up to $115k-$120k. In the next recession, it has a potential of selling for $90k. As Bob Bowling alluded above, I'm a value investor. I like to pick things up at 70-80% FMV. Therefore, I like to believe I'm protected on the downside even if I buy now. Of course, I don't know what I don't know.

@Account Closed, a very successful 76-year old retired real estate investor told me this. "Sex and real estate, get a lot while you're young." I agree with the real estate part, but not sure about the sex part as I'm not there........yet. Hope you and @Jay Hinrichs can chime in. LOL!!!

1 Reply

Jay HinrichsBusiness Member

Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

11y

@Account Closed Ouch 60 is the new 40 don't ya know in more ways than one !!!

Podcast Guest on Show #222

JLH Capital Partners51 Review

Website View Page

1 Reply

Ezra Nugroho

Investor · Milpitas, CA · Member since 2014 · 116 posts · 103 votes

11y

You guys are having too much fun.. :)

Garry Keller said track it weekly. To me personally, it's a bit impractical since many bills are paid monthly. But maybe in his caliber, bills are just pocket change, and he probably makes frequent enough transactions to make it worth while to track it weekly. I only calculate mine once a month, and not to the rigor that GK mentioned in his book. Maybe that's why I am not as rich as him..

So 15-20% upside in the Bay says the sage, with the potential of 30% correction from the top. I know we discussed in the past and worried a bit that 2014 was the top just to find out that 2015 was hot again. As Minh said, I am really seeing China to bring quite a bit of slow down or down turn to the economy. I've heard some expert says that US exposure in China is only 5% of our GDP. However, I think that US emotional exposure in China is quite a bit higher than that.

After quite a bit of considerations, comparing @Account Closed and Yoda feels not fair. Minh is way too tall and too handsome for Yoda...

1 Reply

Douglas Higa

Rental Property Investor · Dayton, OH · Member since 2014 · 41 posts · 13 votes

11y

Net worth is really all that matters. You can always pay yourself whatever you want.

0 Reply

Peter TverdovBusiness Member

Developer · New Brunswick, NJ · Member since 2015 · 1k+ posts · 2k+ votes

11y

I started doing this two months ago and I'm addicted. I even gave it to the bank when applying for a loan recently to show them how serious I am. I'll do it for life now. Those who called it a financial report card are right on the money.

[email protected]732-289-3823

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Chris Field

Investor · Milford, CT · Member since 2015 · 200 posts · 69 votes

11y

To be honest I vaguely keep track in my head I don't care a whole lot, I hate filling out the paperwork for the banks.

I care mostly about what each property is doing and they are tracked to the cent.

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Judy T.Pro Member

Royal Oak, MI · Member since 2015 · 4 posts · 1 vote

11y

Yep, I sure do. I use Mint which makes it so easy if you have straightforward simple finances like myself.

Put it this way- it takes more effort to post a comment on BP than it does to check your net worth on Mint. You literally log in and see your net worth $ (once you set it up).

0 Reply

Kerry BairdPro Member

Rental Property Investor · Melbourne, FL · Member since 2011 · 3k+ posts · 2k+ votes

10y

I track our net worth weekly. Learned it from Keller.

I also made a CashFlow game piece to reflect our finances (with Income, Expenses, Assets and Liabilities filled in) and a time or two playing the CashFlow game with our own numbers clarified what direction we needed to take, i.e. pay off debt, buy another property, etc.

0 Reply

Bob Mastroianni

Wholesaler · West Deptford, NJ · Member since 2016 · 54 posts · 18 votes

10y

I read The Millionaire Real Estate Investor by Gary Keller & have been calculating my own net worth every month. It has really been an eye opening experience for me. I just posted a blog about it last week & have had a few friends reach out and thank me for the info.

https://www.biggerpockets.com/blogs/8486/50716-i-track-my-net-worth-every-month-and-so-should-you

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Do you track your NET WORTH?

Do you track your NET WORTH?

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