Is there a way basically to get into the market without increase in net worth? It is advisable to try to use LEVERAGE as an advantage.
Leverage is the concept that you can pay for something without bearing the full cost. The property allows you to use other people’s money to leverage your funds and purchase larger investments. For Real Estate, you can use leverage by taking out a mortgage to buy a property and only put down a fraction of the total cost
Leverages uses borrowed capital or debt to increase the potential return of an investment
In real estate, the most common way to leverage your investment is with your own money or through a mortgage.
Leverage works to your advantage when real estate value rises.
Leverage is a technique used by both people and companies to expand the potential for returns, while equally expanding the downside of any risks involved if things don’t work out.
While there is a potential for a good return as possible. Like when the real estate prices rise, using leverage can be a double edged sword.
I know the next question on your lips is, how do I access leverage?
The easiest way to access leverage is to use your own money. In the case of a mortgage, a standard 20% down payment gets you 100% of the house in which you want to live.
If you however purchase the property as an investment, you may be in a position when your partners finance some –or even all- of the money.
Similarly, some sellers may be willing to finance some of the purchase price they want to sell. Under such arrangement, you can purchase a property with little or no money down and in some cases, no money done at all.
That’s the beauty of using leverages for your real estate. It works.