What is “Leverage” in Real Estate?

4 Replies

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!