Real Estate Riddle (Leverage Explained)

[Grant Cardone]

Real Estate Riddle:

If you and I buy a $20 million property with $5 million down and it cash flows at 10% a year what did the property cost us?

Answer:

The $20 million property cost us nothing. 

The $5 million less the cash flow of the 10% per year for 10 years ($500,000 a year) means our original investment is returned in 10 years. Now, we literally own the property with no cash.

-GC