Leverage through real estate investment

Real estate investment remains the favorite of many investors by virtue of the fact that investors are able to leverage with the use of bank financing.

Say if a person has RM30,000-00 to invest. In stock market investment, he is only able to buy only RM30,000-00 worth of share. In real estate & property investment, the RM30,000-00 can be used as down payment for the property purchase and the remaining 90% can be paid by way of end financing from the financial institution. As long as the rental income is sufficient for the investor to service his monthly installment, basically the investor can take his own sweet time to wait for the property to appreciate in value. If the rental income is higher than the monthly installment, then he has positive monthly rental return which he can use for more investment. Therefore if the property appreciate in value by 10%, where the price now is RM330,000-00, then the investor has gain RM30,000-00, compared with his initial investment of RM30,000-00, that is effectively 100% return on investment.

Leveraging with bank financing allows the investors to reap higher and faster return and no wonder real estate remains the favorite form of investment for many investors.