Leverage

Leverage in real estate refers to the use of borrowed capital to finance the purchase, development, or improvement of property. By using leverage, investors and property buyers can control a larger asset with a smaller initial equity investment, amplifying potential returns on their investment. This is typically achieved through mortgages, loans, or other forms of financing. While leverage can significantly enhance investment gains, it also increases risk, as the borrower is obligated to repay the loan regardless of the property’s performance. Properly managing leverage is crucial for maintaining financial stability and maximizing the benefits of real estate investments.