Ability to take out loans when buying real estate

One of the most important aspects for the rich when investing in anything real estated-related is the ability to use financial leverage.

So let’s say I buy a building for $10,000,000… why not have the ability to provide 20% of the investment capital upfront, then loan the rest, as long as cashflow can support it?

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It’s an interesting idea, the problem is that real estate really isn’t an investment in this game, and the numbers would not work (you don’t make enough money from rent)

From a real estate location that cost $10 million (your example), I make about $300 per day in rent. My best real estate gets $7300 / day, but that building costs $200 million. Even if the bank only charged you 0.01% interest (it really charges 20%), you would never pay it off as an “investment”.

Real estate is more of a way to shield your money from the negative interest rates that hit every week. Your money in your bank is penalized, but if you put your money in real estate, you’re shielding it from losing value.

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