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Principal Paydown And Appreciation: How Do I Invest To Grow My Net Worth With Real Estate?

So, you’ve got some cash to invest but are trying to figure where and how to invest it. If you have followed the right steps to get started in real estate investing then you have begun to consider the different type of investment strategies you could use. One of the questions that you have probably kept coming across was whether you should invest for cash flow and on-going income or to grow your net worth via appreciation.

If you are new to this whole investing thing cash flow and income may be familiar to you as it is similar to how you currently get paid regularly by your W2 job. This concept of net worth on the other hand may seem a bit more foreign. It should not be understated how important net worth is for building generational wealth for you and your family.

What is net worth?

Yes, that job that provides you high income is great, but is it enough? While a high income is great, net worth focuses on the overall picture of your financial health.

Net worth, put simply, is the difference between the value of things you own and things you owe. Put technically it is the difference between assets (possessions that have value) and liabilities (debts that you owe to creditors). This difference may also be referred to as equity. Depending on what context you are in there may be certain exclusions from what assets and liabilities you would include in that formula.

Even if you lose that high income job (and it’s very possible you may), your net worth may be very valuable to you as a resource in continuing to build wealth and get cash flow despite your employment prospects. A high net worth allows you access to better financial opportunities such as loans or select investment opportunities that would in change continue to grow your income and net worth.