Why is net worth important for buy and hold investors? Or is it?

[Eric Chase]

I keep hearing that net worth is very important. My particular strategy is to acquire buy and hold cash-flowing properties with at least some appreciation potential. As such, I'm not clear why the specific number of my net worth represents anything but bragging rights. Is this simply for future selling purposes/exit strategies? Why should I care about this particular number? Or should I? What does my net worth allow me to do? Can someone help me see what I'm missing?

Thanks as always! Cheers!

Eric

[Jay Hinrichs]

for one off SFR's with conventional mortgages not that critical .. but if your going for larger loans its a must

or if your going to do other type of real estate like developing or building new construction.

I know in my loan covenants I have minimum Net worths I have to maintain ..  and  20% equity in half a dozen 100k rentals don't cut it.. 

but if your goal is to just own that type of product then I really don't think that net worth is quite as critical.

I think cash flow and experience is critical and some decent cash reserves.. lenders will want to see that for rentals.

when your looking at big commercial loans a lot of time the bank or lender wants to see the sponsor or co sponsors' have a net worth of at least the size of the loan.   so when going for a multi million dollar loan that's were net worth comes into play.. maybe some of the MF guys can chime in on that .. not my area of expertise but I have heard that mentioned.