Using Leverage in Real Estate – More is Better ?

Posted by Thomas Beyer

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Real estate investing is like a three course meal (TM).

It has three profit centers: cash-flow (or the appetizer), mortgage paydown (the main course) and equity appreciation through asset improvements and inflationary rental upside (the dessert). One key question in real estate investing is: how much cash to put down and how much leverage to apply via a mortgage.

The more cash down, the higher the cash-flow in real estate investing.

Is this better though ?

REITs typically use 50% or less leverage and can be good investments for retired income seekers. Or should one be higher levered with more equity upside, but little or no cash-flow ?

Look at these three examples … Then you decide.

Thomas Beyer, President

Prestigious Properties Group

T: 403-678-3330 or 604-564-7673

F: 403-770-8885