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 Appropriate for all
Excel: Analyzing and Visualizing Cash Flowswith Curt Frye1h 16m Intermediate
Learning Real Estate Photographywith Scott Hargis3h 21m Beginner
Managing Your Personal Investmentswith Jane Barratt1h 31m Appropriate for all
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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