Try a little leverage.
Advertisement Advertisement Borrow to buy real estate It was the mids and D. Southen was only 24 years old when he bought his first investment — a house near the University of Western Ontario in London, Ont.
To pay the mortgage and other costs Southen rented the place out to six other roommates. Over the years, Southen has continued to borrow to invest in rental properties.
These days he no longer looks at buildings with less than 40 units. For the average person real estate can be a good strategy.
Things work differently in real estate, which is why hundreds of thousands of investors use credit to get started with their first property and then to reach their investment goals much faster than they could with any other investment. In stocks, borrowing money from a broker to purchase is called buying on margin.
That means the income you get from renting out the property covers all your expenses, including the mortgage, taxes, insurance, maintenance, repairs and a contingency fund. Borrow to start a business More Canadians have joined the ranks of the truly rich by starting their own businesses than by any other means — and almost all of them had to borrow big to do it.
But he had to pledge his house as collateral. He gambled that using leverage to secure high-traffic storefront locations in key areas of the city would pay off, and it did. His profits are soaring and his business is still growing.
The best part is, the richer you get, the easier it is to borrow more. If you borrow enough, eventually the people who lend you money are taking on more risk than you are.
If you need to borrow from banks or other financial institutions, it will come at a steep price. Instead, consider borrowing against the equity in your home, says Spence.
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He used a secured line of credit to smooth out cash flows and keep everything on schedule.