net worth vs income/cash-flow thoughts

[Erich Henson]

I've been investing in real estate for 15-20 years. I used the infamous BRRRR method to purchase beat-up single-family homes and turn them into rental properties. With my background as a mortgage broker, I was able to obtain decent financing to accumulate about 57 rental properties (mostly houses, but some 2-4 unit properties). I also have a 10-plex and some office space. I own approximately $12 million in real estate with about $5.5 million in equity.

I feel like I've done a decent job of creating value because I started with basically nothing and now have several million in equity but the problem as I see it is that my cash-flow is not very good at all.  For example, my Return on Equity is only about 2.5%.  I just feel like someone with $5 million in net worth should be making more than me.  

I've made some changes with my property management, which has greatly improved the quality of my incoming tenants so I think that will help.  I also joined a real estate group that allows me to invest in syndications that seem to have pretty high returns on investment.  I recently invested $175k into three syndications so I will see how those go and if they are as good as they claim to be, I'll probably sell off some of my rentals and invest more in those.  

I'm curious if anyone out there can relate to this my situation and I'm curious to know what you did or are doing about it.  I'm not complaining; I think it's a good problem to have, but I just feel like I am doing something wrong or missing something important.  Thank you for your interest.

Erich

[Joe Villeneuve]

Net worth isn't money...it's just an expensive trophy.  Money, to be usable, must be liquid...and replaceable as it's being used.  You can't use net worth, so for me, it's nothing more than a trophy.  It doesn't work for you just because the number is high...as you can see.

However, cash flow is usable, and by its description and source, it is replaceable.  I bet you have a lot of equity just wasting away in these properties...also useless.

Here's what I read from your post above.  You have two priorities:

1 - Net Worth:  A useless number that is nothing more than a trophy.

2 - Number of properties you own:  Another useless number that is a series of smaller trophies.

3 - Building up equity (assumed):  A wasteful number, costing your money that its face value.  The larger the percentage of equity you have on a property, the less value it has, and the more money you are wasting away.