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Help a Strong Financial Foundation; How to Exploit Your Balance Sheet

Building a Strong Financial Foundation

To build a strong financial foundation you need to be clear on several elements in knowing your personal financial situation.  We have talked about your personal income statement and your personal net worth statement, and last but not least is your personal balance sheet.

Personal Balance Sheet Definition:

A balance sheet is the second type of your personal financial statement. A personal balance sheet provides an overall snapshot of your wealth at a specific period of time. It is a summary of your assets (what you own), your liabilities (what you owe) and your net worth (assets minus liabilities).
investopedia.com/articles/pf/08/evaluate-personal-financial-statement.asp

These three balance sheet segments, assets, liabilities, and net worth give lenders an idea as to what the person owns and owes, as well as the amount invested by the person; according to yourdictionary.com.

Personal Assets Definition:

Personal assets might be tangible or intangible. They can be assets owned by the person or assets related to the person’s personal characteristics.

Examples of owned personal assets include:

  • Artwork
  • Automobile
  • Checking account
  • Collectibles Electronics Insurance
  • Jewelry
  • Investment accounts
  • Retirement account
  • Savings account
  • Investment Real Estate (added by Rick Harris)

Part of examples provided by yourdictionary.com

Personal Liabilities Definition:

A financial obligation for which an individual is responsible and which may be satisfied out of her or his assets. (according to Business Dictionary)

Net Worth Definition:

Net worth is the amount by which assets exceed liabilities. Net worth is a concept applicable to individuals and businesses as a key measure of how much an entity is worth. A consistent increase in net worth indicates good financial health; conversely, net worth may be depleted by annual operating losses or a substantial decrease in asset values relative to liabilities.
Read more: Net Worth | Investopedia https://www.investopedia.com/terms/n/networth.asp#ixzz57W58RHAE

The part many people overlook in the definition of a personal balance sheet is the term “a specific period of time”.   Your personal balance sheet is fluid and if you have investment real estate as part of your personal balance sheet; your net worth could changes frequently.

If you own 4 investment properties and your mortgage payments on these properties are scheduled every 15 days; the amount owing to the lender would be diminishing and your equity in each property would rise.  Think about the positive impact to your personal balance sheet if you took on no new debt and just chipped away at paying down your mortgage amounts every 15 days.

Having revenue property and your rent cheques cover all costs of operation meaning your rental revenue is neutral on your investment properties.  Your tenants are paying down your mortgages as your personal balance sheet changes with positive momentum to your net worth.

Knowing every 15 days your personal balance sheet changes; would this not be a great incentive to set up a systematic way to review your personal balance sheet?

Being able to demonstrate to a lender how investment real estate is a method building your financial foundation twice a month; don’t you think they would continue to support you in your financial endeavors?

About the author, W. Rick

Dynamic entrepreneur and sales management strategist; with over 20 years of experience in his field. Rick has achieved multimillion-dollar sales growth while providing award-winning sales leadership and coaching in highly competitive markets.

An active real estate investor since 2002, Rick has developed his purchasing strategies and processes specializing in vacation and recreational properties, single-family homes and condo rentals.

In 2005, Rick re-financed his first rental property to fund the purchase of more positive cash flowing rental properties.

Rick sits on the Board of Directors for several condominium associations and is an active President and Treasurer. Sitting on these boards has given him a wealth of experience and insight into working with property management companies.

Rick has partnered with several joint venture associates and is committed to creating a positive investing experience for his associates by finding the properties, developing the investment, securing the financing and executing a proven positive cash flow system.

Why should you choose Rick as your Online Vault to Investment Real Estate Success Advisor?

An outstanding mentor and coach, Rick will work with you to build your investment real estate business starting from the foundation. From guiding you through the market research and critical drivers, building your team of trades, realtors, and lenders to attracting the investment real estate properties right for your portfolio and the joint venture partners to help you grow.

Through direction and training, Rick will help you develop your investment real estate goals and be a catalyst for you to purchase your first investment real estate property so you can build a strong financial foundation unlocking sustainable wealth and a living legacy for you and many generations to come.

Thank you for taking the only asset that gives us so much through life, but we can never get back our time.

Please join Rick on living his mantra:

” Prosperity for all aspects of your life forever.” W. Rick Harris

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