Learn to calculate your net worth, so you can be a real estate investor. It will help you to create passive income and legacy wealth for you and your family. Here are some practical steps:
- You shouldbalance your assets versus liabilities.
Assets and liabilities are the main components of every real estate investment. Though these two elements are different in nature.When you continue to gain assets, do you make sure that you’re not too heavy on the liability side? So you should balance your assets versus liabilities. That’s the sort of founding principle of net worth.
2.What kinds of purchases qualify as assets?
You can figure out your overall net worth. And what you have to do is to gather up all of your assets and you make a list of them. Such as the saving accounts that you have, and the stock accounts you have.Also your assets include property, vehicles, real estate, other investments, etc. That’s your assets column.
3.How to determine your liabilities?
Liabilities are not your expenses. Liabilities are just the debt you own on your assets. It’s not your cable bill.It’s not your gas bill for the month.For sample, if you have a $100,000 house, but you still have $50,000 as a current debt.That’s your current liability. Furthermore, your home equity loan, and your credit card debts, your student loans.These are your liabilities as well.
- How to calculate your net worth?
So you’ve got two sums. One sum is your assets, the other sum is your liabilities, and your net worth is just the difference between the two. So you subtract your liabilities from your assets, that tells you what you’re worth if you were to sell everything and then pay off your creditors,you would have this lump of cash. That’s your net worth.
5.How to calculate your debt to equity ratio?
Divided your liabilities by your total assets and that goes to your debt to equity ratio. So not debt to income, but debt to equity. That means how much debt are your taking on versus what your own.
Deil D Pecci is a writer and blogger based in Chicago who covers topics on personal finance and entrepreneurship. Deil D Pecci has made Chicago her home along with his wife and children.