Real Estate Investing Glossary
Leverage
Leverage means using borrowed money to buy an asset.
Leverage means using borrowed money to buy an asset. In real estate, a mortgage lets an investor control a property while paying only part of the price in cash.
Why it matters to a Las Vegas investor
Leverage can let you hold more property for the cash available, but it also adds a payment that must be met whether or not the rental is occupied. That makes vacancy and expenses matter more.
Read more from Fernwood
Related terms
Questions about Leverage
Does leverage add risk?
It increases the effect of both good and poor results, because the loan payment stays fixed while rent and expenses can change.
Do all investors use leverage?
No. Some buy with cash, and others use a mix of cash and loans.