A kind of odd question concerning net worth

[Glenn Mayo]

Ok, so, this may seem a little odd, but I was having a discussion with my mother about how you'd calculate your net worth with your real estate. Now, I understand that the basic formula for net worth is Net Worth = Assets - Liabilities, but the question was, in what way do you use your real estate as assets? The way I see it, there are 3 main ways to look at an income-producing property as an asset: 1. you could count the amount of income it's producing as the value of the asset, 2. you could count the amount of equity you have in the property as the value of the asset, or 3. you could count the fair market value of the property as the value of the asset. I suppose there are also hybrid ways to do it, and you'd probably use different ways for different circumstances, but when sitting down, for yourself, to calculate your net worth, what is the PROPER method? Is there a proper method? Kind of a strange question, I know, but I figured it never hurts to ask.