Leverage 101 and How To Use Good Debt To Accelerate Your Freedom

4 comments

Leverage…

  • why is it so sexy?
  • why do you want it working on your assets?
  • Why is investment property the coolest asset class for you to be applying leverage on? and
  • how do you use it to accelerate your time to freedom.

These are just some of the seriously wealthy questions this video answers.

Go here to watch the video now.


I remember when I first really understood leverage and the potential it had to significantly shorted my time to freedom.I kept going back to the numbers, incredulous at what they were showing me. There was this excitement building up inside of me, growing bigger and bigger as I started to understand that with this I would be financially free in just a few years, yet I was afraid to really believe it. I couldn’t stand that disappointment.

  • Was this really so?
  • Was it really possible?
  • Could I double, triple my rates of return by borrowing money?

No matter how I prodded and poked at the figures they always came out the same way, it was true…

And that is exactly what I did!

In the video I also share why using leverage will often make your investing SAFER!

I hope this lesson, which is basically the one I was given that day I finally understood leverage, has enabled you to understand it’s potential when used wisely and more importantly why it is such a powerful tool to use to accelerate your freedom.

In the comments below I’d love to know, your thoughts and your questions on leverage. Let me know:

  • Are you already using leverage?
  • What your feelings are on borrowing to accelerate?
  • Is this just one of those eureka moments where you go, “Oh, now I get why for my investment property “I’m not going to be paying down that mortgage while I’m growing my wealth feast”
  • If you spotted the mistake in my leveraged option calculation tell me what it was and what the actual rate of return is. HINT: it’s even higher. This goes to show that even when you under estimate the income and growth it still works!

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Keep learning and growing because as you know being great with money and creating a juicy feast of a life is a learned skill.

Big love

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4 Comments

  • Fabia says:

    Thanks for the great video. 1 question: Why is the mortgage repayment amount not included in the calculation of rate of return? Only the 3% cost of borrowing is included…what about the cost of the mortgage repayments/principle debt? Thanks

  • Caroline says:

    Hi Anne
    I thought of this a while ago as I own a property and could use the rent from a second to pay off the loan, this is even better, but the problem is I’m unemployed…. hence no regular income and no bank loan, unless I mortgage my house.

  • Charlotte says:

    Hi Ann,

    Thank you for this great video on leverage, I realize now i did not understand leverage accurately in the past.
    In the video, at 6min 10secs, you give a seriously good wealthy tip “always ensure your net yield before interest is higher than the cost of borrowing”. I agree, that is very important. My question is, what if you found a property that fits that statement, but at a later stage, due to political and economic factors outside of your control, your cost of borrowing increases (ie. SA’s junk status and the soon to be impact on mortgages and interest rates), so that part way through your property investment, your cost of borrowing does become more than your yield? What do you do then? How can you prepare for this before entering into this leverage contract?

    Thanks so much, from an excited yet extremely wary,
    Charlotte

  • G says:

    There appears to be an error in Ann’s math in the example of leverage with 3 properties. The net result of the $3000 income minus 3% loan interest on $70K is $3000 – $2100 which equals $900 NOT $800. This brings the ROI to $5900/$30000 = 19.6% for one property. When all 3 properties are included into the equation the ROI then becomes ($5900 x 3)/($30000 x 3) = $17700/$90000 = 19.67%. Does the stated loan payment also include the payback of principle?

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