Leverage is where you buy more property seeking a multiple return on your investment by purchasing more property.
You can't count on the bank to protect you when leveraging cash for a real estate, you must make sure you can pay your debt service (especially if property struggles).
Main question: Can you sustain the mortgage? if not you're putting your equity at risk.
How far can you leverage before you're in trouble:
1) However most banks want to see 10%-20% as a downpayment to protect both you as the investor and them.
2) A good leverage ratio 5 to 1 (if you have a $1MM, you can look into purchasing a property for $5MM)
Watch this video for more information.
Take a moment to offer your comments or questions below.
Showing posts with label equity. Show all posts
Showing posts with label equity. Show all posts
Monday, March 2, 2009
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