Leverage is the use of various financial instruments or borrowed capital to increase the return.

How? If you put down 40%, finance the 60%, the rental income from the property should cover mortgage, insurance, taxes, HOA.

Now, let’s assume you have $300,000 cash to buy a property. SO you buy it for cash. Your benefits include; appreciation, rental income, deprecation deduction, and you personally get to use the property at off times during the year.

Consider: taking your $300,000 and buying two (2) $300,000 properties. You finance 50% of each unit. Each is in an LLC or Sub S.

Advantage: You get deprecation on 2 properties, deduction on borrowed monies, appreciation on 2 units, deduct all expenses with renting and asset protection through corporation or LLC. Solid use of capital and maximizing tax shelters.