A look at how leverage affects investment returns.
- [Instructor] Now tell me, which do you think is better?…Let's say that there's an investment…that takes $100 to invest in.…And for the $100, you get a $30 return every year.…Where for the same investment, let's look at the case…if you borrow 70 of the $100, but in order…to borrow the $70, you have to now spend…some of that income, the net income,…to finance that debt.…
So that $70 costs you $15 a year.…But instead of having to put $100 in,…if you borrow 70, you now only need to put $30…into the investment.…So for the $30 investment, you get to now keep…the rest of the net income after the debt service…which is $15.…So in this case, which do you think is better?…The first case where you get to keep $30…for a $100 investment versus the $15…for the $30 investment.…
If you're looking at pure profit dollars,…well of course $30 is better than $15.…But when you look at investments,…you always have to look at how much…you have to put in, right?…So in the first case, you got $30 for $100 investment…so you're getting a 30% return that year,…
Note: This course uses data and example properties from the United States, but the concepts taught and tools provided are just as useful for any market.
- Determining if real estate investment is right for you
- Choosing a market and a property
- Using financing
- Strategies for first-time investors
- Real estate market cycles
- Valuing a property
- Analyzing your market
- How leverage impacts investments
- Real estate investment case studies
Skill Level Intermediate
Managing Your Personal Investmentswith Jane Barratt1h 31m Intermediate
Learning Real Estate Photographywith Scott Hargis3h 21m Beginner
Excel: Analyzing and Visualizing Cash Flowswith Curt Frye1h 16m Intermediate
Start here3m 29s
1. Case Study: Joe's First Investment
2. The Many Ways to Invest in Real Estate
3. Real Estate Market Cycles
4. How to Value a Property
5. Understanding Your Market
6. What Makes a Good Investment?
7. Understanding Leverage
8. Case Study: Rental Income Property Analysis
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