Less Cash, More Buy with Property Investment
Distinctive from other forms of investment, Real Estate offers a unique opportunity to “leverage” your property purchase against the asset itself. Leveraging occurs when a portion of an asset purchase is financed with 3rd party debt, thereby requiring a lesser amount of personal cash (out of pocket) to acquire it. Essentially, this enables an investor to acquire Real Estate with less personal cash...which magnifies Cash-on-Cash returns and reduces out of pocket risk.
For example, an investor acquires a property valued at $80,000, using $64,000 bank financing (80% mortgage), and only $16,000 personal cash (20% down-payment). If the asset increases 5% in value, 25% of the "cash" portion is thereby recaptured!
See how it works?