Do you track your net worth?

Rental Property Investor · NJ · Member since 2019 · 109 posts · 83 votes

How many of you track your net worth as RE investors. If so, please share with the BP community your approach and what you include under assets and liabilities.

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Charles Carillo

Rental Property Investor · North Palm Beach, FL · Member since 2018 · 2k+ posts · 1k+ votes

@Rex Celle

When dealing with larger multifamily and commercial properties, banks will always request a personal financial statement/net worth statement and REO schedule. I keep one and regularly update it so it is ready to go.

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Charles Carillo
Rental Property Investor · North Palm Beach, FL · Member since 2018 · 2k+ posts · 1k+ votes
7y
@Rex Celle
When dealing with larger multifamily and commercial properties, banks will always request a personal financial statement/net worth statement and REO schedule. I keep one and regularly update it so it is ready to go.
8 Reply
Alina Trigub
Rental Property Investor · Glen Rock, NJ · Member since 2015 · 3k+ posts · 2k+ votes
7y
@Rex Celle
As @Charles Carillo mentioned, banks will require PFS. While each of them have different forms, most of the input is identical. Here's an example of one: https://www.sba.gov/sites/default/files/forms/SBA_...
If you'd like to see more PFS forms, google it.
5 Reply
Max T.
Investor · Philadelphia, PA · Member since 2015 · 3k+ posts · 3k+ votes
7y
I made my own spreadsheet and update it quarterly. I use 4 main categories of asset/liability:
Retirement accounts/529 plan
Liquid equities (stocks/mutual funds)
Real Estate (properties and bank accounts)
Personal (personal accounts, vehicles)
I was going to use personal capital, but they had trouble accessing all of my various accounts and I got uncomfortable with having a 3rd party have my usernames and passwords. By updating in manually every quarter I don't look at it too much, but I really get a good picture of changes over time.
4 Reply
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
7y
has been mandatory for me for decades.. my banks only require it annually.. and they take our word for cash in the bank but again I have accounts with the bank I am giving the PFS to so they can see balance with a click.
Along with Quarterly P and L.. those are mandatory as well.
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Frank Wong
Real Estate Broker · Bay Area · Member since 2018 · 1k+ posts · 3k+ votes
7y
Yes, of course, everyone who is successful does. It's the best way to determine if you are winning or losing in this game.
5 Reply
Blake Edwards
Real Estate Agent · Brentwood, CA · Member since 2018 · 285 posts · 225 votes
7y
It's a must. Not only does it help in dealing with banks, but it's also a great exercise to keep track of your financial health. If it starts to stall, time for a checkup and get a prescription for more properties to get you feeling better ;)
4 Reply
Kevin McGuirePro Member
CTO of BiggerPockets · Seattle, WA · Member since 2019 · 168 posts · 178 votes
7y
@Rex Celle Agree with the posts here. I’ve been tracking it about quarterly for years even before RI and always update year end when preparing for taxes since I’m collecting much of the data anyway.
One absolutely should be able to produce a balance sheet (assets and liabilities) for your RI because put simply you’re running a business and that’s what businesses do. I use QuickBooks Online and can produce that and many other reports at a moment’s notice (second important one is profit and loss). There’s lots of great learning material out there, I do not have a financial background.
Finally, I’ve seen blog posts here on determining net worth. I include RI property value and mortgages, stocks, principal residence and mortgage on it. I include my residence because although one must live somewhere (so it’s not liquid) I could leverage it through refinancing. I don’t include car etc because in my view those aren’t assets.
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Rex Celle
OP
Rental Property Investor · NJ · Member since 2019 · 109 posts · 83 votes
7y
Great to hear that we are all on the same page on this topic. Since I’ve started RE investing, I’ve always been required to provide a personal financial statement to my banker anytime I’m in the process of acquiring properties. I made it a point not only to just do it for loan purposes, but for myself. I threw the question out there because I was up late last night updating my PFS and I was wondering why I did not see many posts around the importance of tracking this - for all the people who are new to RE investing, take note of the responses and make this a top priority as you progress in this business.
7 Reply
Brett Goldsmith
Investor · Los Angeles, CA · Member since 2012 · 1k+ posts · 500 votes
7y
I do. I use mint but also we have an internal company program we can use for detailed reports.
1 Reply
Alex Smith
Property Manager · Chattanooga, TN · Member since 2018 · 179 posts · 92 votes
7y
I don't own any rental houses (yet!), but I still like to keep tabs on my financial health
1 Reply
Scott Mac
Austin, TX · Member since 2019 · 5k+ posts · 5k+ votes
7y
Hi Rex,
You can do it in the CPA format that lenders like to see, or you can do it leaving out your personal life items. Including only things that are "In Play" investmentwise.
Leaving things out such as your wife's wedding ring, jewelry, your personal home(s), personal vehicle(s), boat, snowmobile, camper, personal cash reserves, etc...
It depends on what you want to see decisionwise.
Good Luck!
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Rex Celle
OP
Rental Property Investor · NJ · Member since 2019 · 109 posts · 83 votes
7y
@Scott Mac Great, thanks for sharing Scott!
0 Reply
Rex Celle
OP
Rental Property Investor · NJ · Member since 2019 · 109 posts · 83 votes
7y
@Alex Smith excellent Alex. And keep the discipline of tracking as you build your wealth.
0 Reply
Syed H.
Developer · NY/NJ/PA · Member since 2018 · 758 posts · 935 votes
7y
Yes and no.
Obviously we all keep a PFS updated pretty regularly for our loans.
But my other businesses are harder to value. Putting a number on those businesses is hard. I just put a low estimate/rough number for the sake of disclosing everything on my PFS.
1 Reply
Hideyuki Gojima
Rental Property Investor · Long Island City, NY · Member since 2018 · 82 posts · 18 votes
7y
Yes, I do track my net worth properly not because I need to report to someone but if you consider yourself as an investor, it is always the best to know your financial aspect as properly as possible. Maybe you can just check bank accounts and see how much you have but I do not think that is enough. The basics of accounting will be enough to prepare your personal financial statement such as balance sheet and income statement.
Especially, if you have multiple real estate properties, things can be complicated. If you properly consider accounting and taxation, the profit or the loss you think it is could be totally off. Either way, its always the best to know your financial situation as clear as possible. You thought your net worth was this amount but it could be totally different
If you have one property, maybe you wont really need it but if you have a few, you should consider taking care of your finance properly.
1 Reply
Mike Dymski
Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes
7y
Most people don't know a PFS from PMS.
Preparing one regularly forces us to think about how our capital is (or is not) working.
3 Reply
Steve Vaughan
Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
7y
Originally posted by @Mike Dymski:
Most people don't know a PFS from PMS.
Preparing one regularly forces us to think about how our capital is (or is not) working.
Exactly. Can you imagine asking 100 people on the street? They'd know who got voted off the island or whatever, but def not what a PFS is let alone actually having one.
We are rare birds indeed and I appreciate this platform. I track mine yearly about tax time when I have all the loan and interest stuff out anyway.
3 Reply
Caleb Heimsoth
Rental Property Investor · Durham, NC · Member since 2016 · 7k+ posts · 7k+ votes
7y
@Rex Celle. Yes I used personal
Capital and update it as often as I can (usually monthly), then from there I just take a snapshot and write down that number every 6 months, since personal capital doesn’t do a good job tracking it for specific dates.
I’ve been doing this for 3 years and my net worth is about 15 times higher now then it was when I started..
3 Reply
Lynnette E.
Rental Property Investor · TN · Member since 2018 · 2k+ posts · 2k+ votes
7y
I used to when I had a certain net worth that I wanted to reach. Probably was too obsessed with it.
Now I just add what I am doing on the side to what my financial planner does every year, around my birthday. He needs it for his records, and occasionally, maybe every 3 years or so the insurance person wants it. Though I do not know what the insurance person needs it for, unless he still hopes to peddle something to me, but by now he should know I don't do annuities....
1 Reply
Kyle McCorkel
Rental Property Investor · Hummelstown, PA · Member since 2015 · 638 posts · 653 votes
7y
I use personal capital. It syncs with most of my accounts and the others I need to update manually (monthly). I love it, great tool!
From an REI perspective, I update asset values only when I get an updated appraisal on the property. I don't link it to Zillow or anything like that.
It’s cool to use for BRRRRs because you can really see how your net worth jumps up after getting the new appraised value.
I also track rental cash flow very closely as well using a spreadsheet updated monthly, as I think this should be the main focus for real estate investors.
1 Reply
Jason Dillard
Real Estate Broker · Greer, SC · Member since 2013 · 548 posts · 271 votes
7y
@Rex Celle our in house accountant updates our pfs monthly. He closes out our books and we meet once a month to review balance sheets and profit and loss statements. We started meeting off site about a year ago to focus on just our numbers without distractions. We can track our taxable income vs. our cash flow monthly. It helps us make decisions about what to do to mitigate taxes much quicker.
2 Reply
Sylvia B.
Rental Property Investor · Douglas County, MO · Member since 2014 · 1k+ posts · 1k+ votes
7y
Okay, I have a question. It may label me as "unprofessional," but I can live with that.
If I have no debt, and do not acquire or sell any assets in a given period of time, will my net worth really change enough to bother checking it?
Yes, I have a general idea, but do I really care if my net worth goes from say, 1.1M to 1.15M, or vice versa? For me, the "wow" factor isn't enough motivation to do the work required to determine my exact net worth, and I honestly don't see any other reason to do it.
1 Reply
Lynnette E.
Rental Property Investor · TN · Member since 2018 · 2k+ posts · 2k+ votes
7y
Originally posted by @Sylvia B.:

Okay, I have a question. It may label me as "unprofessional," but I can live with that.
If I have no debt, and do not acquire or sell any assets in a given period of time, will my net worth really change enough to bother checking it?
Yes, I have a general idea, but do I really care if my net worth goes from say, 1.1M to 1.15M, or vice versa? For me, the "wow" factor isn't enough motivation to do the work required to determine my exact net worth, and I honestly don't see any other reason to do it.
Depending on your assets your net worth can change moment by moment. Personally, I do not think it is worth the time and effort to redo it regularly. But that would be a personal decision. Some people may really want to know this information and find it worth the time and effort. I have better things to do with my time.
My 15 year old daughter is learning how to manage assets now and she enjoys looking at an online brokerage account and is amazed that it can go up and down by $30k in a moment. But that is what happens with stocks. For housing, it goes up and down too, but its pretty hard to figure out exactly how much as its value is based on finding that willing buyer.
Unless you are borrowing commercial money, you likely do not need to know your net worth. And since you have no debt, you really do not need to do this task. A napkin estimate is probably fine. But it may be worthwhile to look periodically as you plan for the future to see if you are going in the right direction. That is all I do.
1 Reply
Rex Celle
OP
Rental Property Investor · NJ · Member since 2019 · 109 posts · 83 votes
7y
@Sylvia B. Hi Sylvia, good question - All of the perspectives coming in from the collective BP community on this topic is intended to educate people who are new to investing in real estate that will be leveraging large amounts of debt in order to acquire properties. So, if investors are accumulating various forms of debt to accumulate assets it is critical to track their net asset position, otherwise it can lead to bankruptcy if large amounts of debt are taken out irresponsibly.
1 Reply
Jordan Parham
Indianapolis · Member since 2018 · 3 posts · 1 vote
7y
@Max T. I like how you separate it into four separate groups. Not checking it so often would help my stress level lots!
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