The 3 Types of Leverage Every Investor Needs to Know | Ep. 103

In this episode, we discuss the three types of leverage that every investor needs to know. These are: 

1. Leveraged Returns – when you invest in property, you are able to purchase an asset that is worth far more than the deposit you have put in. If you put in a 20% deposit, then you buy an asset that is 5x more valuable than your own deposit. The benefit of leveraged returns is that if that asset (property) goes up in value at 5% each year, that is 5% on the whole asset, which is 25% of your initial deposit.


2. Leverage Off Your Own Home – May property investors in NZ don't start their property investment journey with a cash deposit. Rather, they leverage off their own home in order to find the deposit.


3. Leverage Off Your Tenant's Rent – Many 1st-time property investors are worried that they are going to have to fund a second mortgage. This is not the case. Because you have a tenant in your property, you are able to use their rent to cover your operating expenses and the mortgage (at least a portion, if not all). 

These three types of leverage work together to make property investment both a passive form of investment, but also an affordable means of creating wealth for everyday New Zealanders.