Archimedes famously proclaimed: “Give me a lever long enough and I shall move the world.” In finance, like in physics, leverage allows accomplishing incredible acts with only a fraction of the effort. We talked about our hard money loans and the leverage they provide in our previous blogs, but let me re-cap.
Hard money loans allow a real estate investor to effectively compete with cash offers while investing only a fraction of cash needed to purchase and rehab a property. Alternatively, hard money loans allow well-heeled investors who do have enough cash to buy a property outright to multiply their profits by investing in several properties at once. In their case, financial leverage that hard money loans provide allows them to operate on a large scale and make more money.