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.
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.
@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.
Oh yes, I understand that. I guess the implication that one who doesn't carry a lot of debt and isn't fretting over numbers that in many cases are just estimates anyway is unprofessional just irks me.
Rental Property Investor · Lindsborg, KS · Member since 2019 · 25 posts · 14 votes
7y
I update mine the first of every month. For me, I'm still paying down debt while attempting to save money for retirement/real estate. I actually start filling in the cells in my spreadsheet around the 20th or so and then start asking "ok, if i have any extra money, where can i be putting it to max out my net worth number?"
I treat it like a game and I'm going for the high score every month. Sometimes I probably spend too much time focusing on it, but its taken me to a better place so I'm gonna keep doing it!
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..
Does personal capital take into account rental properties as assets? I mean the value and 25% equity portion as assets?
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..
Does personal capital take into account rental properties as assets? I mean the value and 25% equity portion as assets?
Yeah you just list the house value as an asset and then the balance of the loan.
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..
Does personal capital take into account rental properties as assets? I mean the value and 25% equity portion as assets?
Yeah you just list the house value as an asset and then the balance of the loan.
Thanks! Hmmm I guess I have to figure out how to list things as assets
I complete a personal balance sheet on a monthly basis, in Excel, items listed down the A column, the dates across the top. I use the last stock market trading day of each month as my closing date. It includes all major assets & liabs, inc some pers prop that has value (or is individually insured) & I would consider selling to fund new found opportunities or if there was a major emergency requiring a change in budgeting/liquidity.
My PBS is currently three pages long, broken into sections w/ sub totals to assist in analysis:
Assets
Real Prop (Assessed, Purchase/Rent data, 2-3 free online providers like Redfin, then averaged.)
Personal Property (Cars, Art, Hard Assets, things not in an account or "foggy" daily market value)
Cash Accounts (ie funds w/ access not limited by age, Banks, Brokerages, CVLI, prepaid taxes,
large pending incomes like insurance settlements & reimbursements owed to me.)
Mine
Spouse
Co-Accounts
Retirement Accounts (or anything where access to the value is age restricted)
Mine
Spouse
Business 1 (Net number carried over from separate business records)
Business 2 (List as needed)
Liabilities (Would section these out too if I had enough to justify it)
Listed in order of assets above if tied to such, mortgages, HELOC, etc.
General liabilities listed next, largest to smallest.
Net Worth Calculation
Then I include several lines of totals; subtotal of amount available for conversion to REI, ratios & simple measures like mo / mo & trailing 12 mo avg % & $ return.
My FI goal is over the long term to average at least 1% mo / mo gain in net worth.
I have found this to be best for me for several reasons:
I have a hard time visualizing a set $ amount as a goal because my amount required to retire would then seem too big to tackle.
It's a goal that never ends, unlike having a set $ # goal.
It treats increasing assets & decreasing debts more equally & it's not overly aggressive which could encourage over leveraging & return chasing.
I know hitting this goal at a minimum, when dealing with large numbers, over 20-30-40 years will get me well past a defined/limited FI number needed for "standard" retirement. I enjoy the adventure of wondering/chasing what the amount will be.
Correction/Crash Risk. If I have a specific $ # goal, hit it and "retire", I don't want to un-retire just because there is a massive crash in asset values the next day. Even after I "retire" this 1% monthly gain goal will remain.
Then at the very bottom I include a simple 3 line, double axis chart showing total assets, total liabilities and mo / mo % return over time.
Investor · Atlanta, GA · Member since 2013 · 3k+ posts · 3k+ votes
7y
I don't have that many properties (20), so I just make one whenever I buy another property and the lender asks me. I am not buying, buying, buying, so the changes come with appreciation (which are pretty good, since I've been buying next to developments).
All Over, USA · Member since 2017 · 689 posts · 756 votes
7y
Been using Personal Capital, about as long as I’ve been on BP. Watched net worth triple in that timeframe. Easy adding our new properties. Graph is fun to watch. Snowball effect in full force - esp with dual W2 401k maxout and the recent bull run.
I check it regularly, mostly because I also use it to track our CC spending/transactions.
About 95% of my investments can be tracked automatically on it. I have some short term notes that aren’t listed on there, but those aren’t a big deal for overall net worth.
Rental Property Investor · Lindsborg, KS · Member since 2019 · 25 posts · 14 votes
7y
OK, clarity question....
So, you calculate into your net worth the appraised value of the home as an asset, and the mortgage as a liability, right? Example: 100k valued home purchased with a traditional 20% down loan, so 80k mortgage, would equal out to a positive 20k net worth, right?
What I'm leading into more of this is, for people that talk on the podcasts about having a million dollar net worth, and champion the BRRRR strategy and staying leveraged....so essentially they have over 5 million in assets, but 4 million in liabilities, roughly, if they're staying leveraged?
So, you calculate into your net worth the appraised value of the home as an asset, and the mortgage as a liability, right? Example: 100k valued home purchased with a traditional 20% down loan, so 80k mortgage, would equal out to a positive 20k net worth, right?
What I'm leading into more of this is, for people that talk on the podcasts about having a million dollar net worth, and champion the BRRRR strategy and staying leveraged....so essentially they have over 5 million in assets, but 4 million in liabilities, roughly, if they're staying leveraged?
Am I following this line of thinking correctly?
Yes, you have that correct. If they have 80% leverage on everything. Except for some extreme cases it usually doesn't work out that clean - your lender might stick you with a 75% limit. Or you might get a bum appraisal that forces you to leave some money behind when the real market number is much higher. But you have the concept.
As for the original question, I always know in my head my rough number. I work out the actual number once a year at tax time. Beyond that, I don't tell anyone what I'm worth one way or the other so the number is only useful for me in terms of tracking my financial progress.
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