Leverage is a fundamental tool in real estate investing, allowing investors to acquire properties while using their own cash for just a fraction of the total cost. Borrowing money to invest in income-producing properties can amplify your returns, allowing you to scale faster than relying solely on your own capital. However, excessive leverage can prove to be a double-edged sword—when the market is in your favor, it opens the door to greater opportunity. But if the market turns against you, it can lift the lid on Pandora’s box. In this article, I’ll explore the benefits and some of the hidden dangers of high leverage, how it can impact long-term investment success, and ways to strike the right balance.
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