When I started buying houses, the bank would always want a personal finance statement so I whipped up an asset and liability spreadsheet. It wasn't hard or fancy. Over the years, I've taken to updating it in December.

For the property values, I would look up on Zillow and Redfin their estimated value and average those numbers. Bank accounts and 401K values were easy to plug in. Car values can be located on Kelly blue book web site. Loan balances were also easy to determine.

It's become kind of a score card for me. Am I increasing my net worth? Did I have a good year?

Simply taking (this year Net Worth - last year Net Worth) / last year net worth gives you a percentage increase.

This year I am questioning if I am getting ahead. I think we all know the government CPI is "manipulated". CPI is being reported at 2.4% for the last 12 months.

My growth was 16% from last year which sounds good but it is measured in a dollar value that is decreasing. Maybe I am just breaking even?

Anyway that's where my mind is going on this Sunday morning. Who's got any input, insight, or thoughts on this topic?

I can no longer apply at a bank, savings in loan or any other "governmental" insured institution for a real estate loan! Why? Asset Protection!

Once when I was being sued by tenants with liars, I mean lawyers, they obtained a loan application from the lender of the property in question. A kid, who's parents purchased him a used car, decided to change his oil himself. He has no job, lousy grades, but the parents gave him a car on his 16th birthday. All illegals, with a California law saying everyone deserves a drivers license. No insurance of course.

The kid did not use any axle stands. Just a car floor jack and a few blocks. The kids siblings jumped on top of the car while he was changing the oil and the car slipped off the jack, falling on top of him. Not dead. Not serious injures. The car was partially supported by the flipped jacked and blocks tipped over.

We don't particularly care about net worth as it's kind of a made-up number based on shifting values we can't control: stocks, bonds, houses, other assets...nothing we can really do about those numbers.

We care about cash flow only. Are we making more per month/per year than we did last year? And then the question is: Are we GROSSING more or NETTING more?

Bonanza I would think that the money you spent this year getting your MTRs up and running would skew that number.

Then again I am headed out the door for a late T-Day meal at a Cracker Barrel. Woo, hoo. Would rather stay home and run my own numbers.

I have a spreadsheet that I have had for years that I update every now and then,especially if dealing with a lender. Net worth has gone up alot in 4 years, I pay alot of attention to that.

@Robert J - I wish I had your knowledge / life experience.

@6X6 - Well this math is just addition, subtraction, multiplication and a little division. Not too hard. I think it is important to see some forward progress for your efforts.

@WMH - I think you need some goal or score card if not net worth. Gross and net income would be a more tangible marker. Which goes back to my original question - if the CPI is not a good marker for inflation, and your net is up 10%, are you making more, breaking even, or falling behind with respect to inflation.

@zero - it probably would have been. I don't really know. How do you account for spending to make more money in theory?

We also have a basic spreadsheet. We have been debt free for about 10 years now, that is a tremendous help.

Net worth went way up as most of our worth is in RE. But due to inflation, I mean the REAL inflation numbers... we may have lost ground.

I'm with you. I have a spreadsheet that I have tracked my net worth for almost 30 years with a really pretty line chart showing that value going up year-by-year, even projected into the future based on past %s. It was invaluable as a motivator to me. Every major decision was weighed against what the likely impact to the net worth over the long haul. In fact, it was considering how to increase net worth that caused me to jump into RE.

I agree with WMH, cash flow is important in the shorter term to make sure you are able to pay the bills. That said, Net Worth is and has been the gold standard measurement for hundreds of years by the old money families in measuring long-term success.

Trying to drive up current cash flow can cause you to make poor long term decisions. An example is deferring replacement on a roof that is leaking, great for driving the current years cash flow higher but ultimately more costly when you have a big repair bill down the road. Net worth tends to focus you on the longer term. The challenge is to account for your assets real value when calculating it. For example, that 20 year old roof should be depreciated in your calculation for the property value. I doubt many of us track our net worth down to that level but even without that level it can still be a good tool to keep you focused on increasing the size of your empire.

OK, call me an accounting nerd, but I LOVE preparing my annual financial statement. I do it in April after the taxes have been paid for the prior year. To compare it to football, I consider our tax return preparation to be the playoffs, and the personal statement to be our Super Bowl. (Sick, I know.)

Anyway, as a former accountant, I can tell you that the all-encompassing personal financial statement (income statement and balance sheet as well as a statement of current cash flow) is the gold standard for presenting your financial condition (and comparing it to a prior period) for yourself and any lenders.

I have a spreadsheet that I update each month with values (stocks, 401k, real estate) and debt to estimate net worth.

Another tab has the breakdown of cashflow per property, gross and net.

Bonanza, I just wing it and hope for the best. Throw all my money on the table and pray that I get the correct number on the roulette wheel.

Well maybe not that haphazardly.

Used to be that each door had to make enough to cover its own expenses for the year, not even calculating depreciation for capital expenses.

Now we look at it as a whole. I put a lot of roofs on a couple years back. I pulled money out of a few places to do so. Well I pulled more than that and used the excess to pay off a couple places and buy another.

I openly admit that we probably are flying by the seat of our pants when it comes to long term net worth. I have an excel file I created back when we started. It has grown but doesn't have all the data points it should.

I run a new copy each year and have a couple pages that hold data from the start. Property cost, profit/loss for each year, estimated property value, mortgages, etc.

Would love to move to the next level on tracking this stuff. I love running the numbers. I realize that they can be manipulated at times to make the outcome more desirable, but I try and keep them as real as possible.

In the very early days, we used to try to run each property as an entity and put aside x per property, but quickly realized that could result in deferred maintenance on one while another flourished, so we take care of any property as needed. In the end, it's all one pot of gold.

Well put WMH, better than I said it.

We now put out the fires as well as what we know s upcoming.

Send an email to the editor. That will get to him.

You could also call and talk to Barbara. Tell her I said hello. Then have her get your information to him.

16% increase in net worth doesn't say that much. after all, are you guessing the value of your places? Didn't the Trumpster get convicted for giving his opinion on a property's value. Some properties are just hard to figure out the values.

I have small percentage ownership interest in a series of oil wells down in the Permian basin in Texas. I get royalty checks of about $1,800 to $3,000 monthly and one large check annual for about $15,000. What is that worth? I know I paid only a six figure number for it, but that value depends largely what party is in office. One party will inflate the monthly payments by pushing a green agenda. The other party will devalue the monthly payments by opening up more exploration.

16% is a solid return. But it doesn't express the amount of risk you faced to get that 16%. If you are working in class D locations, 16% might be a low number. I have seen pics of some of your places and you should be happy with 16%. Those are solid returns with quality products.

We all know the price of real estate depends on the day of the year it's sold and a host of other factors. Might sell for 240K in April and 200K in December. I am not planning on selling anything and mainly just using an average zillow / redfin price as a theoretical objective 3rd party. At least for my area they are in the ballpark for an optimistic sale.

I am happy with things increasing and when inflation was under control it would be an awesome number. If real inflation is 10% then my 16% is really 6%. Things are moving up and down and sideways. Hard to know what the true aim is.

You can force appreciation on a property. The worse shape it is in the more you can force it.