Leverage (financial)

Leverage — using borrowed money to control an asset larger than your equity. It multiplies the identical underlying return in both directions: a 10% gain on a property bought with 20% down is a 50% gain on your equity; a 10% loss is a 50% equity loss, while the amortization arrives on schedule regardless. Level 3’s standing rule: never sign leverage without positive carry, DSCR ≥ 1.25 at purchase, and a survived +3% repricing stress test — all three, in writing, before any reservation fee.

First used in: 3.1 · Leverage: the sword’s both edges