Leverage

Leverage is the use of borrowed money to control a larger asset than an investor's own cash could buy alone. It amplifies both gains and losses, since returns are measured against the equity invested rather than the full purchase price.

Example

On a $10,000,000 property bought all cash, a 10% rise in value is a 10% gain. Buy the same property with $3,500,000 down and a $6,500,000 loan, and that same $1,000,000 of value growth is a 28.6% gain on the equity.