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Real Estate leverage is the use of borrowed money to increase your profits in an investment. Building wealth via real estate requires the use of leverage. Let's assume you have $100,000 to invest and you purchase a small income property for $100,000. Let's assume that income properties have been appreciating at an average of 7% per year. At the end of the first year of operation, your property is worth $107,000. At the end of year two, it is worth $114,490. Now let's assume that you put your $100,000 down on a $500,000 income property. At the end of the first year, it is worth $535,000. At the end of the second year, it is worth $572,450. By using leverage or borrowed money to purchase a larger income property, you have increased your profit by $57,960 in just two years.
The advantages of using leverage are two-fold. First, because more money is invested, leverage significantly increases the percentage of profit you can make. Second, and more importantly, leverage allows you to purchase a much larger investment than you would normally have been able to. To get the full advantage of leverage, put the minimum down on a good property which has a strong likelihood of appreciating in value.
The real "secret" to taking full advantage of leverage is locating and acquiring self sustaining, high ROI properties. While this is in no way an easy task, SFLA Investments is here for you. By locating properties which demand rental incomes that exceed your carrying costs, we simplify the process for you. From funding to tenancy to management to the final sale, we cover it all! Don't let the hassle of being a landlord stop you from building wealth with this proven investment strategy. Call us at SFLA today!!