Does 1mil in net with make you a "millionaire"

Investor · Bryan, TX · Member since 2016 · 165 posts · 82 votes

This should be a fun topic. For arguments sake lets say.... You have 1 mil net worth in rentals. Positive cash flow. Let's say it's all financed through the bank with 20% down on each. That makes 20% of it your cash and the rest debt. Are you a millionaire?

0 Reply

154 views

Most Popular Reply

JD MartinBusiness Member

Moderator

Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes

10y

You don't have 1 mil in net worth, you have 1 mil in gross value. You have 200k in net worth based on what you have posted, assuming you have no other assets. Using your example, you need 5 mil in real estate to have 1 mil in net worth. And of course that is a moving target, depending on what the market looks like when you sell.

Podcast Guest on Show #243

Skyline Properties

View Page

8 Reply

See this reply in the discussion

49 Replies

Jump to latestLatest

Sort by

Jonathan G.
Investor · Marietta, GA · Member since 2015 · 382 posts · 258 votes
10y
no nope
0 Reply
Bill Turner
Investor · Tallahassee, FL · Member since 2013 · 77 posts · 24 votes
10y
That is like saying I have a dollar in the bank and the bank has a million, I would be a millionaire NO
0 Reply
John P.
Investor · Vacaville, CA · Member since 2016 · 433 posts · 249 votes
10y
I am confused. How are you defining "net worth?" Break it down a little more.
The follow up question is what does being a "millionaire" even mean in today?
1 Reply
JD MartinBusiness Member
Moderator
Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
10y
You don't have 1 mil in net worth, you have 1 mil in gross value. You have 200k in net worth based on what you have posted, assuming you have no other assets. Using your example, you need 5 mil in real estate to have 1 mil in net worth. And of course that is a moving target, depending on what the market looks like when you sell.
Podcast Guest on Show #243
Skyline Properties
View Page
8 Reply
Steve Vaughan
Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
10y
A million in net worth by definition is a millionaire.
Someone who's net is only 20% of a million may be well on their way, but only a fifth of the way there!
This person needs 20% of 5 million to be a millionaire even though they control $1M in RE.
7 Reply
Derrick W.
OP
Investor · Bryan, TX · Member since 2016 · 165 posts · 82 votes
10y
this was a discussion I had with a friend. I say no as well.
Isn't gross value calculated from production?
0 Reply
Evelyn Roper
Investor · Oklahoma City, OK · Member since 2016 · 98 posts · 51 votes
10y
I have always heard net worth includes all of your assets minus all of your liabilities. You can have control of a million dollars in property and a negative "net worth" if your liabilities are too high.
5 Reply
Evelyn Roper
Investor · Oklahoma City, OK · Member since 2016 · 98 posts · 51 votes
10y
Originally posted by @Evelyn Roper:

I have always heard net worth includes all of your assets minus all of your liabilities. You can have control of a million dollars in property and still have a negative "net worth" if your liabilities are too high.
0 Reply
Jonathan G.
Investor · Marietta, GA · Member since 2015 · 382 posts · 258 votes
10y
This is also referred to as "magical thinking".
0 Reply
Anthony GaydenPro Member
Rental Property Investor · Omaha, NE · Member since 2014 · 2k+ posts · 3k+ votes
10y
Originally posted by @Derrick W.:

This should be a fun topic. For arguments sake lets say.... You have 1 mil net worth in rentals. Positive cash flow. Let's say it's all financed through the bank with 20% down on each. That makes 20% of it your cash and the rest debt. Are you a millionaire?
I think you are confused about the definition of "net worth".
Podcast Guest on Show #21
3 Reply
Derrick W.
OP
Investor · Bryan, TX · Member since 2016 · 165 posts · 82 votes
10y
Net worth is a concept applicable to individuals and businesses as a key measure of how much an entity is worth.
If you have 80% debt and 20% cash down payment, are you WORTH a million dollars??? Yes,Some day all the bank notes will be paid off but the question is about "now"
Am I still asking this wrong?
0 Reply
Taylor Kamal
Real Estate Agent · Willowbrook, IL · Member since 2016 · 17 posts · 10 votes
10y
Sounds like you're calculating "Gross Worth" there 😜
4 Reply
Jared SawyerPro Member
The Dalles, OR · Member since 2016 · 27 posts · 6 votes
10y
Net worth on a balance sheet would be a snapshot in current time. Just because you may eventually pay the loans down and have an actual net worth or $1m doesn't mean you have it today.
0 Reply
Thomas S.
Member since 2016 · 13k+ posts · 12k+ votes
10y
By definition if you have a million in cash or equity you are worth a million dollars. However in todays world you had better have a lot more, a whole lot more, than that before you start calling yourself a millionaire.
0 Reply
Anthony GaydenPro Member
Rental Property Investor · Omaha, NE · Member since 2014 · 2k+ posts · 3k+ votes
10y
Originally posted by @Derrick W.:

Net worth is a concept applicable to individuals and businesses as a key measure of how much an entity is worth.
If you have 80% debt and 20% cash down payment, are you WORTH a million dollars??? Yes,Some day all the bank notes will be paid off but the question is about "now"
Am I still asking this wrong?
If you own 20% of $1,000,000 your net worth is $200,000. Therefore you are not a millionaire. Do you understand?
Podcast Guest on Show #21
1 Reply
Derrick W.
OP
Investor · Bryan, TX · Member since 2016 · 165 posts · 82 votes
10y
@Anthony Gayden yes I understand it much better now. I stayed up late last night researching these definitions. And, as I said above I don't believe that in this example you would be a millionaire. What got this started was the countless hours of pod cast, youtube videos and webinars. We have found guys That start out by saying "I'm worth 1.3 mil in rentals in 3 years" then teaches how he put x amount down, borrowed the rest. I understand NO one would listen if he said "this is how you get to be 1 mil in debt in 3 years". Is there a proper term for any of this?
I told y'all this would be a fun thread!
1 Reply
Anthony GaydenPro Member
Rental Property Investor · Omaha, NE · Member since 2014 · 2k+ posts · 3k+ votes
10y
Originally posted by @Derrick W.:

@Anthony Gayden yes I understand it much better now. I stayed up late last night researching these definitions. And, as I said above I don't believe that in this example you would be a millionaire. What got this started was the countless hours of pod cast, youtube videos and webinars. We have found guys That start out by saying "I'm worth 1.3 mil in rentals in 3 years" then teaches how he put x amount down, borrowed the rest. I understand NO one would listen if he said "this is how you get to be 1 mil in debt in 3 years". Is there a proper term for any of this?
I told y'all this would be a fun thread!
I don't really think there is a proper term for this but I have heard people say things such as "I own $1,000,000 worth of real estate". It is kind of misleading.
Actually owning $1 million in real estate is my short term goal. As of right now I am about half way there with three properties worth a combined total of about $500,000. My longer term goal is to have $1 million in equity in my real estate holdings.
Podcast Guest on Show #21
0 Reply
Levi T.Pro Member
Rental Property Investor · Tucson AZ / Nice FR / Washington DC · Member since 2016 · 1k+ posts · 1k+ votes
10y
Ha, a long time ago they invested this website called Google... In a nutshell, net worth is the value of all your assets, minus the total of all liabilities. Put another way, sell everything you own and after you pay off all your debts, it is the amount of cash you would have leftover. If you come to 1m time said and done, then yes you are, otherwise nope. If your friend waits 20-30 years for payoff, well then he or she is at that time, but not today.

Being a millionaire is not what it used to be, that's for sure. I know plenty of millionaires who are cash poor. Cash is always king, and he with the biggest war chest wins, so live well below your cashflow needs and you will be richer than most men!
1 Reply
Joshua Martin
Investor · Milwaukee, WI · Member since 2016 · 389 posts · 193 votes
10y
Net worth is always assets - debts. So if you own a 100k property with 80k in debt you don't even have a net worth of 100k, you have 20k. When you those properties off in 20 years, maybe.
0 Reply
Derrick W.
OP
Investor · Bryan, TX · Member since 2016 · 165 posts · 82 votes
10y
so maybe "potential future net worth millionaire" is the correct name? :)
0 Reply
JD MartinBusiness Member
Moderator
Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
10y
I think the correct name is "bankrupt to be", as anyone who thinks they are worth $1 million under those conditions is more likely to be the former than the latter ;)
Podcast Guest on Show #243
Skyline Properties
View Page
2 Reply
Derrick W.
OP
Investor · Bryan, TX · Member since 2016 · 165 posts · 82 votes
10y
@Anthony Gayden I have the same goal. I'm running right behind you though. My 1st goal is to own 1mil overall in rentals. Then convert that to a bunch of zeros and commas in my bank account. A long uphill battle for sure but if I can pull it off the fish population around the world will will fear me after my retirement.
1 Reply
Marcus Johnson
Investor · Saint Paul, MN · Member since 2015 · 663 posts · 512 votes
10y
Real simple. Assets - liabilities = networth.
4 Reply
Dana WhickerPro Member
Investor · Fernandina Beach, FL · Member since 2014 · 557 posts · 374 votes
10y
Strictly interpreting the wording of the OP, yes you would be a millionaire.
2 Reply
David Dachtera
Rental Property Investor · Rockford, IL · Member since 2014 · 4k+ posts · 2k+ votes
10y
Another thing to remember is that thanks to inflation 1 million today does not mean what it did even 10 years ago.
Within recent memory, a $10,000 car was considered quite luxurious where that same amount to barely pays for something "good used".
Today, a "ten-millionaire" would be roughly to equivalent to what a "millionaire" once was.
Even to be "rich", Forbes Magazine says you need to have a gross income of $1 million a year. The logic being that you can use income to pay for your lifestyle, while networth provides no income.
0 Reply

Join the conversationCreate a free account to reply, vote on answers and follow this thread.