Foregoing Leverage Out Of Fear Fuels Failure
Leverage Trauma Will Curtail Your Success
Let Go and Let Leverage Help You Prosper in 2013
Paralyzing fear stemming from traumatic losses during the market bubble burst has caused the real estate leverage pendulum to swing from one extreme to the other, leaving many real estate investors short of reaching their full business potential.
Real estate leverage can be either the most dangerous kind of quicksand trap or the most beneficent kind of business boost.
A healthy sense of respect for the delicate balance that leverage requires is not a bad thing to have in one’s arsenal of real estate investment wisdom, but after the experiences of so many, real estate leverage has taken on a bad rap, often touted by the more conservative (read fearful as bad business practice.
This kind ideology and philosophy around real estate leverage is unfortunate.
The truth is that real estate leverage, if used wisely with respect to the possibilities as well as a vigilant eye on cash flow, is actually an investor’s greatest asset and can be a useful means to greater opportunities for growth, success, higher returns, financial gains and, ultimately, the lifestyle of one’s dreams.
Balance is everything.
While paying cash, refusing debt and avoiding overhead is certainly playing it safe, it is also playing it so safe as to be a detriment to top end potential, cap growth and significant returns.
With cash buyers, private moneylenders and motivated sellers now more accessible than ever, leveraging is more important and easier to accomplish than before and should be taken advantage of.
Imagine paying $900,000 in cash for a property, investing $150,000 to rehab it and ending up with $50,000 in profit; now compare that to diversification and utilizing leverage. The interest and returns alone can be compounded repeatedly, allowing for tremendous additional returns in just a few months, not to mention wealth preservation and liability protection.
Real estate leverage is not to be demonized but rather embraced. As with anything worth anything in life; balance is the key. With that in mind, leverage can be your best friend.