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Most people don’t buy property solely with the money they’ve got in their own pockets. It’s simply not necessary- if the bank is willing to back you up for part of the cost of the property, it just makes sense to let them help you in that way. This is a good deal for people who are buying homes just for themselves and their families, but an even better one when we start talking about people who are buying properties as investments.

The process of using borrowed capital to increase the return on an investment is called leverage. For most investors, this means borrowing money from a bank. When you set out to buy a property, the bank is generally willing to cover between 75 and 85 percent of the cost, with the rest being covered by a down payment made by the investor. 

Leverage helps investors to get the most return possible on their investments by reducing the amount of money they have to put down up front, while in no way impacting the value the property might appreciate. 

Think about this example. Let’s say a property is listed at 500,000, and the bank covers 80 percent of that. The investor only has to put in 100,000 as a down payment to start out. The property then appreciates in value by five percent, meaning it is now worth 25k more. The property’s value increased by only five percent, but the value of the investment increased by 25 percent.

How is that possible? Well, through the magic of leverage, the investor only paid 100k. The 25,000 they made was a return on the 100k, not the full price. Thus, the investor was able to make a profit of 25 percent instead of only 5 percent. Real estate is one of the only markets in which this is a possibility- the bank won’t pay for you to buy gold, but they will help you finance an investment in real estate. By letting them help you, you help yourself get the most bang for your buck. 

 

 

 

 

About Pat Zackery

Pat is a real estate investor who is actively involved in the Atlanta, GA area of real estate investing for a number of years.  her mission is to provide quality housing for quality tenants, while at the same time providing an above-average return on investment (R.O.I) for our joint venture partners and ourselves.  It is truly a win-win-win way of investing!

If you aren’t already on our prospective investor contact list, you are welcome to join us and be the first to know when we have exciting and profitable investment opportunities available. Just put your contact information in the box at the right of the screen, and I will also give you access to a short video called Why Real Estate is An Exceptional Way To Invest“.

For more information about Pat and her investment program, please call (404) 988-6651 or email her at pat@patzackery.com or visit https://patzackery.com/