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 1900 dollars, you pay 1900 dollars. You put in the asking price, and that’s that. It makes sense, it’s reasonable- 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 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 in order to purchase a property.

Banks will typically cover 75-85% of the cost of a property, and 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, but what’s really nifty is what you’ll experience as your property appreciates value.

Properties can naturally gain value over the course of time. Say you purchase a property valued at 500,000 dollars, and the bank finances 80% of that. You’ve put 100,000 dollars into that property, with the rest covered by the bank. And let’s say that then, the property appreciates by 5%, or 25,000 dollars. 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- AKA, profit!- from that property, but the amount of money you paid remains the same.

With that in mind, you didn’t make 25,000 on a 500,000 dollar 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 Jin Kim:

InvestwithJin.com is a real estate investment company. We have been actively involved in the Downtown Toronto area real estate investing for a number of years.  Our mission is to provide quality housing for quality tenants, while at the same time providing an above average return on investment (R.O.I) for our investor partners and ourselves.  It is truly a win-win-win way of investing!

If you aren’t already on our prospective investor contact list, you are welcome to join us and be the first to know when we have exciting and profitable investment opportunities available.  Just put in your contact information in the box at the right of the screen, and I will also give you access to a short video called “Why Real Estate is An Exceptional Way To Invest”.

And if you are ready to find out more about our investment program, I invite you to contact me directly, and I will be happy to show you exactly how it works, either in person, by phone, or on-line.

For more information about Jin and his investment program,
please call (416) 579-1129