What’s with kids these days? Sharing every private moment on the internet…
Always posting a picture of what they had for lunch and every little positive thing that happens with a #humblebrag.
If you think the openness of Millennials is shocking, just take a look at financial bloggers!
Publishing Your Net Worth
There are hundreds of bloggers who publish every detail about their finances. Credit card debt, student loan debt, what they spend in a month, even exactly what they earn.
The majority of these people choose to remain anonymous. Sometimes because they have so much debt it’s awkward. Sometimes because they have so much money it’s crazy. Others just don’t want their co-workers to know their salary. Whatever the reason, anonymity allows them be more open.
I think there is tremendous value in having an actual person with a picture as the creator of the website. You can get to know me and see I’m an actual person, a regular guy doing nothing special, but able to get great results.
So rather than publishing every detail of my financial life, I have decided to focus exclusively on my rental property portfolio.
The Net Worth of My Rental Properties
We have extensively covered how there are 5 different components that contribute to the overall return on a rental property. It isn’t limited to just the value of the property going up, like most stocks (those that pay a dividend have 2 components).
But when you calculate net worth, you don’t include cash flow. It would be foolish to say “I’ve made $750,000 since I began working, so my net worth is $750,000!”
Instead we are examining the current value of assets, minus all liabilities. For a rental property it is what the house is worth minus the mortgage balance.
Generally speaking, the longer you have held a property, the more equity you can expect it to have. The tenant is slowly paying down the mortgage, and if things go well, the home price is increasing each year.
This shows in the results – the Atlanta property I have held for 5 years and the Memphis property just 2 years. Here are the numbers:
Current Net Worth: $77,771
That sounds pretty impressive to me! Hopefully in 2017 we can add a 6th digit and one day long in the future join the 2 comma club.
If you look at the complete numbers update for the two properties, you saw my investments were $19,936 and $24,030 for the two properties. This $44k wasn’t necessarily a direct contribution to the portfolio either, since there was roughly $7k in cash flow in the first three years of the Atlanta property, which was reinvested. But to give a rough idea, half of the portfolio net worth is from contributions and half from gains.
What do you think – is this good progress in the first 5 years of rental property investing?