Leverage is the use of borrowed money to increase the potential return on a real estate investment, allowing buyers to control a more valuable asset with less upfront cash.
In real estate, leverage works because you can purchase a property with a down payment and a mortgage, then benefit from appreciation on the full property value rather than just the amount you invested. For example, a 20% down payment on a property that appreciates 10% effectively doubles your return on invested capital. The tradeoff is that leverage also amplifies losses if the property declines in value.
GoForth, a luxury co-ownership company, makes leverage even more accessible by splitting the purchase price of luxury homes among four families. Each family's 1/4 interest means a smaller total investment, and financing options are available for those who want to further reduce their upfront outlay. This layered approach lets owners access homes worth $2 million or more for a fraction of what sole ownership would require.