For my part, I prefer to count only investment and savings accounts for eligibility to be in this race. But it's no skin off my back if someone else counts RE or other traditionally illiquid investments.
Around 2013 we started buying rental properties. Over the next 4 years we bought and fixed up 4 rentals, with a very long pause in the middle. Investment costs were around $200,000 including renovation costs. Those properties are now worth around $380,000 and provide an income of $20,000 a year. Let's round that down to $350,000 to allow for realtor sale commissions.
If I had taken that $200,000 and put it in index funds, it would have taken about 8-9 years to get to that $350,000.
So, even if it takes 1 to 6 months to sell those properties, I was still able to sell it for $350,000 in my pocket 4-5 years FASTER via real estate than I could have sold my stock for the same amount..
:) Think about that for a moment.
And while you're thinking about that, recognize that my real estate was producing $5,000 per year of partially tax-sheltered income that I did NOT have to re-invest to get to that $350,000 valuation, which incidentally would only produce an income of $14,000 a year, NOT $20,000 a year which is what we're getting.
Recognize also that I bought at the bottom of the market and that appreciation in value is largely due to the renovations we did, not some hot and crazy real estate market.
So, yeah, I'll consider my real estate investments in this total.
Same with the farmland I inherited that folks sharecrop for us. The land has a value and it could be sold. It's good farmland and good farmland only comes on the market every few generations -- so there's a good chance it would sell reasonably fast. But since we're buy and hold investors, that farmland acts like bonds that produce income that's uncorrelated to the stock or bond market. If crops are really bad we won't go out of business unlike a corporation that we might have purchased a bond from. Our share of the income is about $20,000 a year.
Those two sets of investments produce an income of $40,000 a year, the equivalent of a $1,000,000 stock portfolio.
We've got another property that we purchased and then resold to help family friends set up a real estate business. We hold a $94,000 mortgage note on a property. They don't have to pay us anything for 2 years to help establish them, with no accrued interest in the interim. After that we'll be getting 5% interest plus principal payments. Hell, even our real estate charity to friends is making us money. FYI, they are getting 2.25% a month on that investment, or 27% a year for the first 2 years. It will drop down to 1.5% a month once the mortgage payments kick in, or 18% a year.
Yeah, you bet we count those investments in our net worth.
If we had to, we could downsize to one of our rental houses and get the 100% equity out of our home as well. In the meantime it's saving us money compared to renting an inexpensive house.
The original thread-starting post didn't want to include these items. I disagree for the reasons above.