Leverage Up

What is the number one thing that any one person or corporation can use to place themselves in an advantageous financial position? Financial leverage is not a new topic, and has been used for centuries to build the world that we live in now.  Most old schools of thought on finance is to live a life on being debt free.  The appeal to this is not having to worry about any debt once we approach our later years.  The belief is that half way to retirement is to have your house paid off in full so the remaining years can be focused on living with a peace of mind.  In modern times and the current state of our economy, I would say it is time to change the thinking by introducing ideas on how to strategically leverage oneself financially.

In the past 4 -5 years, we have seen an influx of investment capital from overseas to acquire real estate in the U.S.  The majority of these purchases have been made using an all cash model due to it yielding the highest negotiating power.  For an ordinary investor utilizing this model will tie up all their investment funds in a very limited number of properties.

All investments come with a certain amount of calculated risk, but the amount of opportunities could multiply through financial positioning.  Available loan programs in the current market place such as Non-Qualified Mortgages offer investors the ability to leverage themselves by increasing their purchasing power.  Instead of committing all their liquid resources into one or two properties, they can now leverage their assets across a broad range of opportunities.  This can be considered as horizontal leveraging by allowing aggressive financial products to be a game changer in one’s investment strategy.  In terms of real estate investments, this is probably one of the soundest and quickest ways of multiplying an investment portfolio with a certain amount of funds.  This strategy will expand an investor’s purchasing capacity and an all cash investor might want to consider. Financial leverage can be most advantageous if focused correctly.