CalculateRealEstateROI

Financing

Leverage

Using borrowed capital to control more real estate than cash alone allows — the single largest driver of real-estate wealth velocity.

Reviewed by Keiron Brown, Founder & Editor, CalculateRealEstateROI · Educational estimates only — not investment, financial, tax, or legal advice

Core concepts

Return amplification

80% LTV roughly 4x's cash-on-cash return at the same property yield.

Risk amplification

Leverage compounds losses equally — 20% value drop wipes 100% LTV equity.

Healthy leverage zone

Portfolio LTV 50–65% balances velocity and resilience.

Examples

  • $100k all-cash 6% yield = $6k. 80% LTV at 7% interest = $20k invested, ~$5k cash flow = 25% CoC.

Practical applications

  • BRRRR, scaling, refinance laddering.

Common mistakes

  • Over-leveraging past 75% portfolio LTV.
  • Ignoring rate reset risk on adjustable loans.