The Power of Leverage (Cash Vs. Leverage)
Buy a $500K home. Hold for 5 years. Sell for $600K.
After closing costs, you net around $564K.
Option 1 – All Cash:
- Invested = $500K
- Profit = $64K
- 2.44% annual return
Option 2 – FHA Loan (3.5% down):
- Invested = $20K
- Profit = $64K
- 26% annual return
Same house. Same sale price. Vastly different ROI.
**Excludes PMI, taxes, and monthly payments but the principle stands.
Most Popular Reply
Put both monthly payments in with a 7% interest rate(today's rates).
What's the math then out of curiosity?