Join Free! | Login    
   Popular! Books, Stories, Articles, Poetry
Where Authors and Readers come together!


Featured Authors:  Michele Poague, iMarie Wadsworth, iD. Wayne Dworsky, iLisa DAnnolfo Levey, idawn kunda, iWilliam Guy, irichard cederberg, i

  Home > Business/Investing > Articles Popular: Books, Stories, Articles, Poetry     

Larry D Matthews

· + Follow Me
· Contact Me
· Success story
· Articles
· Poetry
· Stories
· Blog
· Messages
· 165 Titles
· 563 Reviews
· Save to My Library
· Share with Friends!
Member Since: Oct, 2005


Subscribe to the Larry D Matthews Newsletter. Enter your name and email below and click "sign me up!"
Larry D Matthews, click here to update your pages on AuthorsDen.

Featured Book
Letters From the Earth: Faint Hopes and Lamentations
by Lonnie Hicks

This volume has the various elements of Earth speak directly to us. Available at:  
BookAds by Silver
Gold and Platinum Members

by Larry D Matthews   
Rated "G" by the Author.
Last edited: Sunday, April 11, 2010
Posted: Sunday, April 11, 2010

  Print   Save    Follow    Share 

Recent articles by
Larry D Matthews

The Women In Our Lives
Merry Christmas Everybody
A Relationship
Seasons Come and Go an Unusal Comparison
Are You Having Trouble Believing In God ?
Do You Know What You Are Eating ?
Is There A God
           >> View all

Leverage or financial leverage is one of the most important aspects of building wealth through real estate investment.


Leverage or financial leverage is one of the most important aspects of building wealth through real estate investment. I will try to make my example as simple and understandable as possible.

If you have $100,000 dollars to invest and go out and buy a small home for $100,000 dollars cash. Let us assume the rental income is $800 per month x 12 months = An annual income of $9600. Assume again your property taxes are $900 per year, insurance $700 per year and allow $1,000 for property maintenance and up keep. Total expenses = $2,600. So after expenses your net income is $7,000. We are assuming the tenant will pay all utilities. Your investment of $100,000 will give you a 7% annual return with out factoring in appreciation. This income will of course be taxable. If real estate were to go up in value at an annual rate of 5% you would make another $5,000 which would be taxed as a capital gain a the time of sale. (applicable at different rates in different countries.) In Canada in some cities just this year real estate values have gone up by 25% or more in the last 12 months. The average home price in Vancouver British Columbia is now in the $1,000,000 range. Imagine your home (principle residence) making you $250,000 tax free in one year. I would be very tempted to cash out and move to the east coast of Canada where I could possibly buy the same home for $250,000 and retire with $750,000 in the bank. Now that’s a plan.

Now let’s say we take our $100,000 and buy 5 similar homes and put $20,000 down on each. We finance $400,000 and our mortgage payments total $2,000 per month or $24,000 per year. Our income at $7,000 per house is $35,000. After debt service we make $11,000 per year. (over 50% more) but here’s the real bonus. Again assuming 5% appreciation now on $500,000 worth of real estate = $25,000 per year. That is a 25% return on your $100,000 investment for a total $25,000 + $11,000 = $36,000 = 36% per year. Now that is the power of leverage. Amazing. Yes there is more risk. You have debt. There is more hassle (5 tenants as compared to one.) Is it worth it ? Only you can decide. Does it work ? ABSOLUTELY. That’s how people become millionaires. Can anyone do it ? Absolutely. In my career spanning 35 years I have applied it (I now own $3,000,000 worth of real estate) I have consulted with and helped many of my customers do it. If you have any questions feel free to contact me and thank you for reading my article.

Larry Matthews

Web Site: Hants Realty

Want to review or comment on this article?
Click here to login!

Need a FREE Reader Membership?
Click here for your Membership!

Popular Business/Investing Articles
  1. Frank Sinatra & John Wayne Refused Dirty H
  2. Kim Kardashian & Elvis Presley's Twitter P
  3. Best Books for Shark-Tankers
  4. Direct Hit Movies Like Clint Eastwood Does
  5. Boris Karloff's Work Ethic
  6. The Power of QuickBooks
  7. Sean Connery Tells His Reason for Success
  8. Schwarzenegger Used a James Bond Lifestyle
  9. The Ultimate Book for Freelancers
  10. If they can do it in 1929, you can do it i

Free Download - Small Business Manual by Sam Vaknin

Issues in owning and managing a small business...  
BookAds by Silver, Gold and Platinum Members

In Search of the Perfect Economic Matrix by Lawrance Lux

An Evaluation of the current Economy with theoritical proposals to alter economic performance. It provides insight into the historical economic position of the United States, how ..  
BookAds by Silver, Gold and Platinum Members

Authors alphabetically: A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Featured Authors | New to AuthorsDen? | Add AuthorsDen to your Site
Share AD with your friends | Need Help? | About us

Problem with this page?   Report it to AuthorsDen
AuthorsDen, Inc. All rights reserved.