People who are into property investing are obviously in it for a purpose and that purpose is to create wealth.
The amazing thing is that many people do not know what their personal wealth is, even if they have one or two investment properties. Often times they are very happy with the fact that they have managed to purchase the properties and they keep going on their merry way.
The point is that if you keep tabs on your personal wealth you will know exactly (or almost) what you have achieved and this may also be a motivator to keep growing your wealth.
Understanding your personal wealth
Investors need to keep on top of this because property values do go up and down and although we have said it can be a motivator to buy more properties, it can also be a wake up call to bring you to your senses and take steps sell a property if it is not performing, or to take action to improve its worth.
Make the calculation
It is not difficult to do and can simply be done by:
What does need to be known is the value of your properties. Now you are not going to be able to do this right down to the last cent (although a bank would prefer this) but at least you can get very close by knowing what similar properties in the same area have sold for. In other words a Comparative Market Analysis.
It can be all too easy to own properties but not be up to date with the actual debt that is owed on the properties and this is important.
Working out your calculations gives you a true net worth picture.
When you are a property investor you are running a business and you have to do financial figures for that, but there are too many other ‘extras’ in the business balance sheet to give you a true picture of your very own net worth that is why you need to make the calculations above.