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A person can also leverage their time, money and connections to make a maximum impact and get from point A to point B faster and with less effort. We'll discuss this after a quick illustration about how leverage can create a windfall... quickly.Leverage is what catapulted my investment career many years ago, and it was a great learning lesson on appreciation and the leverage of existing capital. At the time, Southern California was going though an upswing. The markets were appreciating nicely and I knew it was time to get in to leverage my time and resources for maximum profit. I utilized funds from a recent home refinance to put a down-payment on a four-unit property, which was of fair market value, but a total fixer-upper. Before I made the offer (beating out several others with a wonderful technique I will disclose in another article), I made sure the property would pay itself off from the rents. Important: I also saved some funds from the cash I had to do the work needed on the property. Thanks to an appreciating market and our diligence in research in finding a value-add property, we soon saw amazing equity. As easy as this sounds, behind the scenes, months of daily work went into this.
To find this diamond of a deal, I had to be on alert for months, scour the internet for deals, drive around my target markets, plus engage in busy work on other deals that went absolutely nowhere.
Hard work is always rewarded, and within 18 months, we were in escrow again selling the same four-unit complex we purchased for $428,000 for a new price of $676,000. We took a $80,000 boot (cash) upon the sale and did a 1031 Exchange on the remaining balance to four multifamily properties out of state.
By investing outside of California, the equity from one single four-unit property was used to LEVERAGE into 24 apartments - 4 four-unit buildings.
So as you see, here are a few examples of how leverage can be used to Maximize your Time, Resources and Funds.
It was wonderful to receive that $80,000 check for my efforts and to go from owning a small complex to a portfolio of properties in two states!
The rewards of LEVERAGE have been duplicated over and over in my life, and now I'm lucky enough to be in a position to give back this and so much other first-hand knowledge that I have accumulated throughout my 20-plus career as a landlord in California and other states.
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