The Power of Leverage in Real Estate 

Have you ever looked at entrepreneurs or individuals that are able to run large organizations or many projects all at once and asked yourself how in the world they are able to accomplish so much? Have you ever asked yourself how in the world an individual with no experience can go out and develop a large apartment complex? Have you ever wondered how a group of individuals can go out and buy multi-million-dollar multifamily properties, hotels, gold courses, resorts, etc.? 

If you are anything like me, the answer would be yes. Why? I was never raised knowing that this was a possibility. I never learned about this in school. The way individuals and companies are able to accomplish so much is through the power of leverage and the various facets of it, and its various vertical and by products. What do we mean by this? Take the acronym other people’ (OP) for example – what could be included in this? Time, money, knowledge, resources, experience, etc. 

As Tony Robbins states, 

“The straightforward concept of “leverage” has the power to get you more time, better fitness, career development, business success, financial freedom and relationship contentment. Despite these benefits, most of us don’t utilize leverage in business or personal matters as much as we could. You may lack confidence in your skills and assets, so you fail to take advantage of them. Or you may be aware of your resources but unclear on what it means to leverage them.” 

Here is a quick overview of some of the different types of leverage that can apply in business and in life: 

A. Financial Leverage: This means using other people’s money or credit to accomplish a goal. 

B. Time Leverage: This means using other people’s time or leveraging strategies such as automation to accomplish a goal. 

C. Knowledge Leverage: This means using other people’s knowledge and experience to accomplish a goal. 

Here is a quick overview of an example that considers financial, time, and knowledge leverage: 

Ken Van Liew is an author, educator, engineer and one of Manhattan’s most successful Real Estate experts that we recently had on our Podcast, which is centered around real estate and small business. Ken Van Liew has garnered international praise for his work in various facets of the building trade. Over the years, Ken has managed the syndication and development of numerous high-profile real estate developments totaling more than $1.3 billion dollars in capital investment. 

Ken, as he details in our interview with him, managed to develop various real estate project, with limited knowledge on the topic – instead, he worked with professionals that understood the trade (knowledge leverage). Beyond that, to ensure that he had the finances required to develop projects, he often raised private money, used money from governments, etc. (financial leverage). Beyond that, while he was working with professionals (i.e., contractors, city officials, etc.), he was leveraging the time of other people to be efficient and accomplish goals (time leverage). 

The takeaway? I will venture to say that you are much like myself. You were raised in a manner where it was not proper to talk about money at the dinner table. You were taught that debt is bad. That leverage is bad. In my humble opinion, this teaching, while it may be good-hearted, comes at our own peril and detriment. Debt and leverage are an instrument – it is neither good not bad. If you use debt to acquire a care that depreciate the moment you drive it off the lot, is it bad? Yes. What if you use debt to acquire a piece of real estate that pays for all the debt and gives you the cash flow 

you desire, is it that good? Yes. It is up to you to educate yourself on the power of leverage and find individuals that are where you hope to be. Go make it a great day! 

Sources: 1. Carrillo, Cristian, 

2. Robbins, Tony, ‘The Power of Leverage’

This information presented on this site is for informational purposes only and does not constitute an offer or solicitation to sell shares or securities in the company or any related or associated company and is not a recommendation to pursue a specific investment opportunity. Any such offer or solicitation will be made only by means of the company’s confidential Offering Memorandum and in accordance with the terms of all applicable securities laws.

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