What is “Leverage” in Real Estate?

Question

Hi!

I was wondering, what is leverage in real estate? And how can you use this to your advantage?

Jon Reed · Answer

Well.. here you go, the below link will tell you all you need to know about leverage.

What is leverage in real estate?

Joseph Firmin · Answer

Think of the fable of Atlas - using a fulcrum to move the world... Use something small to move something big.  The fulcrum is leverage.

Leverage in real estate is using $20,000 to buy (control) a $100,000 investment property. You are using a smaller thing to control or move a bigger thing. If you buy a duplex and live in one side (house hack) you could buy it FHA, put 3.5% down and you're using A LOT more leverage to control a bigger asset.

Hope that helps!

Grayson White · Answer

@Jon Reed

Great explanation!

Grayson White · Answer

@Joseph Firmin

Thanks for the input!