Understanding PFS

As you start to scale and buy more real estate, having a PFS or Personal Financial Statement is vital.

This is especially true when you start buying commercial properties as well.

Let's breakdown what goes into a PFS.

A Personal Financial Statement is a document that provides a snapshot of an individual’s financial situation at a given point in time. It lists all of the person’s assets (what they own) and liabilities (what they owe).

The purpose of a PFS is to help understand an individual’s net worth and overall financial health.

Key Components of a PFS:

1. Assets: These include cash, stocks, bonds, real estate, retirement accounts, personal property (like cars or jewelry), and any other valuables.
2. Liabilities: These are debts or obligations, such as mortgages, loans, credit card debt, and other liabilities.
3. Net Worth: This is calculated by subtracting total liabilities from total assets. It gives a clear picture of how much a person is worth financially.

Why is a PFS Important for Real Estate Investors?

• For Financing: Lenders often require a PFS when considering a loan for a real estate investment. It helps them assess the borrower's financial stability and ability to repay the loan.
• For Planning: A PFS can also help investors understand their own financial position and make informed decisions about future investments.

Knowing where you stand financially is vital. It helps you make decisions on investments and in your business, both in the short term and long term.

Additionally, if you ever have any questions about passive real estate investing, I am here to be a resource.

Keep the cash flowing,

Brandon