The Power of Leverage

[Logan McKay Zylstra]

I think often newer investors get caught up in cash flow. While I certainly see how cash flow enables people to achieve financial freedom; leave a W2 job, retire early, or allow them to chase any dream they might have. There are other benefits to real estate beyond cash flow. In this post, I want to look specifically at appreciation.

While, I’m not saying that cash flow or making enough in rent to cover costs isn’t important, because it is important. I believe that real wealth generation is created through appreciation. Whether that be forced (fixing up a property, increasing rents, etc.) or market appreciation. Being able to leverage real estate, creates the ability to create massive cash on cash returns during the sale of a property that has appreciated.

Again, I think having strong cash-flowing assets is important, but if you are wanting to achieve a substantial net worth, there needs to be room in your portfolio for assets that you make or believe will appreciate.