One of the best parts of buying a home is the ability to leverage your money. This means that you have used a small or zero down payment to purchase an asset worth many times more than your down payment.

Leveraging your money is a tool many real estate investors use to make money. Most people could not afford to buy an investment property with all cash so they use their credit and a small down payment to purchase investment properties. For example, Investors take $5000 which by itself is not enough to purchase a home, and use it as down payment to purchase a $100,000. They have used $5000 to purchase a home worth $100,000.

Then when the home appreciates 20% to $120,000. The $5000 used to purchase the home will have appreciated to $20,000 or a 400% return on cash invested.

Another tool for leveraging your money is to understand and use Pay Option ARMs. Pay option ARMs feature a deferred interest payment option that is so low it actually increases the loan balance. This option is popular for investors who demand increased cash flow and understand the effect of deferring interest.

 

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