Buying Real Estate with Leverage

“The man who has won millions at the cost of his conscience is a failure.” -BC Forbes

Leverage is a way in which the casual investor can buy real estate with very little capital. The investor
can buy real estate is that worth a lot more then the investor total assets or equity. In most cases, a real estate investor can receive loans up to 90% of the total worth of the property he wishes to buy. The investor signs a mortgage based on leverage. This is because real estate investing is extremely low risk and any real estate investment is predicted to drastically increase the wealth of the investor.

Real estate is one of the only consumer purchases which appreciates over time. Unlike cars, vacations, or computers – buying real estate is a true investment. Real estate usually doubles in value every 5 years.

Based on inflation, real estate appreciated by at least 4 % yearly. Real estate is a great long term investment and is a great way to use a little capital and turn it into a huge profit. For example if an investor wants to buy a home for $300,000 dollars, but he has almost now cash upfront he uses leverage to purchase the home.

With 7% appreciation each year, the return investment is $21,000 dollars. Now you definitely can not make that much money that quickly on the stock market. Not without taking huge risks with money you can not afford to lose.

The more money the real estate costs initially the higher the appreciation will be and the bigger profit you will get. If you were interested in investing in real estate then you should contact your financial advisor or a local real estate investor who will be able to give you more information on this exciting investment opportunity.

Leverage only works on pieces of property that appreciate. In areas where appreciation is high the more leverage an investor will be able to have. You can predict appreciation by taking a look at the history of the area where the land, house, or company space is located. By looking at other properties and what they were bought and sold at, you can have a clear picture of what your potential profit could be.

If you are interested in adding value to a home or business space, improvements are a great place to start. For example, on a residential home the installation of a carport, garage, new kitchen and bathroom, extra rooms, and hard wood floor installation are all ways in which you can increase the value of home.

For the most part home value will increase double what you paid for the home improvement. If hard wood floors cost you $5000 then the increase in your home value is going to be approximately $10,000.