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Updated over 5 years ago on . Most recent reply

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Grayson White
  • Member since Nov 11, 2019
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Grayson White
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Grayson White
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Buying & Selling Real Estate

What is “Leverage” in Real Estate?

Grayson White
Posted

Hi!

I was wondering, what is leverage in real estate? And how can you use this to your advantage?

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Joseph Firmin
  • Rental Property Investor
  • from Smyrna, GA
  • Member since Oct 9, 2018
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Joseph Firmin
  • Rental Property Investor
  • from Smyrna, GA
  • Member since Oct 9, 2018
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Joseph Firmin
  • Rental Property Investor
  • Smyrna, GA
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Joseph Firmin
  • Rental Property Investor
  • Smyrna, GA
Replied

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!

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