Most real estate decisions and transactions are financed using some means of an outside source of capital. Financial leverage measures the degree to which debt is used to finance an investment. When deciding whether or not the use debt to finance a real estate investment decision, it is important to consider the projects return on equity both when leverage is used and when leverage is not used. One should decide to use leverage (debt financing) if investors expect a higher ROE than if they purchased the investment using all cash. This is known as having a favorable or positive leverage. On the other side, investors should not use debt financing if they predict to receive a lower ROE than if they had paid all cash. Below is an interesting website helpful for learning how to make successful real estate decisions:
http://www.getrefm.com/
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