Comment by shaewest
2 days ago
The leverage is the loan taken for the mortgage. If you have a $1M property, $900k loan. If the property's value increases by 5%, that's $1.05M, so you've made 50% returns on your $100k capital invested. That's leverage, the leveraging of $100k to get the returns of $1M asset.
> That's leverage, the leveraging of $100k to get the returns of $1M asset.
Obviously. But that's not leveraging real estate, that's just leveraging cash.
Leveraging real estate would be using the property as collateral for a loan larger than the property itself
Isn't it incredibly obvious in my first message that the leverage is on your deposit, and therefore leveraging the cash.