For more investments, you have no choice but to pay the market price for whatever it is you’re buying. If an ounce of gold costs $1,900, you pay $1,900. You put in the asking price and that’s that. It makes sense, but it’s not the smartest way to turn a profit on your investment. Wouldn’t it be neat if you could find someone else to help you pay for the investment you’re making, while still allowing you to keep 100% of the profit you’ve earned?
With real estate, that’s possible. Leverage is when you use borrowed capital in order to increase the potential return on an investment. In practice, this typically looks like borrowing money from a bank to purchase a property.
Banks will typically cover 75 to 85% of the cost of a property, while you make a down payment for the remainder. This limits the amount of money you have to invest in the first place, which is nifty. What’s really advantageous is what you’ll experience as your property appreciates in value.
Properties can naturally gain value over the course of time. Say you purchase a property valued at $500,000 and the bank finances 80% of that. You’ve put $100,000 into that property with the rest covered by the bank. And let’s say that then, the property appreciates by 5% or $25,000. It may seem at first glance that you’ve made a 5% profit on that investment, but that’s not actually the case! You get to keep 100% of the appreciated value – also known as profit! – from that property, but the amount of money you’ve paid to acquire it remains the same.
With that in mind, you didn’t make $25,000 on a $500,000 investment. You made $25,000 on a $100,000 investment. That is a 25% profit and that’s great.
In this way, you can use leverage to turn a nice profit. By utilizing the resources that banks have to offer, you can maximize your financial gain and make the most of your money.
About Julie Grondin:
juliegrondin.ca is a real estate investment company focusing on ”buy and hold” which means we invest for a period of time between 5 to 10 years or even longer. We have been actively involved in the Fort St. John, B.C. area since 2019. We also keep our eyes open on various other markets as the economic cycle evolves. My markets of choice are well positioned to offer great cash flow and appreciation. My mission is to provide quality housing for quality tenants, while at the same time providing an above-average return on investment (ROI) for my investor partners and myself. It is truly a win-win-win way of investing!
Julie offers her investor partners hands-free investment opportunities. If you are interested to learn how to earn an above-average return on your investment, backed by a solid asset, and without the hassle of being a landlord, please contact Julie.
For more information about Julie and her investment program,
please call (403) 493-4226 or visit https://juliegrondin.ca/