Like many, I wish I’d learned the TOOLS for creating wealth in college. 

Instead, I had to spend 35+ years learning this game the hard way.

And today, I’m going to share one such massive tool for creating wealth.

Once I mastered this tool, I realized how coming from nothing could actually work in my favor.

I could stop buying into all the lies society told me about creating wealth.

I could accelerate the growth of my net worth by leaps and bounds.

This tool is none other than leverage, and today, I will cover:

  • What leverage in real estate IS and IS NOT… including several misconceptions about debt
  • Why leverage matters so much in real estate investing… and why it’s the #1 tool many wealthy people use to their advantage
  • 8 ways to get leverage in real estate… and how I would use leverage wisely if I were starting over.


Imagine you’re trying to lift a heavy rock off the ground.

You could spend all day using your entire body to lift the rock… and putting all your energy into the task.

Or you could use a tool – a lever.

You slip the lever under the rock and press down on the tool.

And with much less time and effort, you’ll be able to lift the rock off the ground.

In the case of multifamily investing, the rock is the apartment building you’re trying to buy.

And instead of using all your own resources to “lift the rock”, you can use the tools I’m going to talk about in this article.

Yes, these tools include leveraging good debt in the form of commercial loans and creative financing.

But I’m also going to show you some hidden forms of leverage many people overlook in real estate.

Before we start, I want to address all the fear and anxiety in our society around debt.

When we think about debt in our society, we often think about mounting credit card

bills, out-of-control mortgages, upside-down deals, and good people who go bankrupt.

We think about $1.75 trillion in student loan debt, and a record-breaking $930 billion in credit card debt.

This is what I call bad debt – debt that people take on without sufficient INCOME to repay it.

I don’t blame anyone for doing this – we’ve all grown up seeing people borrow money for education, consumable items, a house to live in, and a car to drive around in.

But they treat these things like assets… when they’re not.  After all, none of them produce any income.

And more often than not, these people do not have enough income to repay these debts.

This is NOT the kind of debt I’m talking about when I talk about leverage.

As I see it, there’s a difference between good debt and bad debt:

Before we continue, let’s clear up a few more misconceptions about leverage:

⇒ Leverage is NOT trading time for money. 

Because when you trade time for money… you get your money, but your time is gone. 

You’re not getting anything valuable on top of what you’ve already traded… unless you increase your value at work, which I’ll talk more about later.

⇒ Leverage is NOT investing in single-family residences (SFRs), flipping houses, and wholesaling. 

Renting out an SFR to one tenant is not leverage. 

In fact, you’ve lost the leverage to the tenant. 

You’re still trading your time for money, and you can’t scale your income with 1-4 units alone.

⇒ Leverage is NOT owning a home. 

There is some leverage in paying a small down payment to take out a loan on a house… 

But housing expenses tend to increase over time, and a house doesn’t pay you income every month. 

And there is no guarantee you can sell the house for a profit in the future.


When somebody tells me they own 100 units and they’re all paid off, I say they have completely missed the point of multifamily investing.

They have missed out on the ultimate tool that many wealthy people use to multiply their riches quickly.

Did you know that rich people are taking out more and more loans despite the economic gloom in 2022?

In the second quarter of 2022, Bank of America and Morgan Stanley recorded double-digit growth in loans to wealthy customers. 

In fact, Federal Reserve data from 2019 shows that wealthy people borrow a lot more money than the country’s lowest earners, as shown below.

Source: Board of Governors of the Federal Reserve System (US)

In the first quarter of 2022, the top 10% of wealthy people were responsible for 25.1% of all debt in America, according to FRED1.

Let that sink in… 

Despite forming only 10% of the U.S. population, the Federal Reserve2 also reveals thatthese wealthy people held a QUARTER of all existing debt in the country.


Not because they’re using that debt to go buy Rolexes or Ferraris.

It’s because they recognize how to leverage good debt to create wealth.

According to Rick Calero, head of banking and lending at BNY Mellon Wealth Management, “Millionaires and billionaires manage their personal financial affairs the way they would run a business — by utilizing their entire balance sheet — including the use of leverage — to fund their spending and their investing.”

And while wealthy Americans are taking out a lot of debt, they do so strategically to multiply their wealth.

So don’t be scared of the word “debt”… when it’s done right.

You will need to embrace the concept of good debt, and learn to use it wisely, if you want to last in the game of apartment investing.


Leverage in real estate could be a tremendous tool if used correctly.

Leverage can enable a smart, savvy real estate investor to grab massive opportunities today – instead of waiting years or decades down the road. 

By utilizing leverage correctly, an investor can potentially build a collection of properties – and long-term wealth – in a fraction of time, with very little of their own resources.*

Leverage could also potentially explode returns on a deal.*

Let’s use a 32-unit multifamily property, typically worth about $4 million, as an example.

When the math is done correctly, I believe 32 units is the magic number that makes a deal worth doing.

An investment of 32 units and above is more likely to create enough cash flow to pay investors passive income, pay down the property’s debt, and pay the building’s property management team well.*

We’ll compare the Cash-on-Cash Returns in each example, and you’ll see why leverage makes such a big difference.

* Results not typical. Please seek the advice of a professional before investing as individual results may vary.

Cash-on-Cash Return is a ratio that compares the returns received from an investment – to how much was actually paid out of pocket for the investment (Initial Investment Amount). 

It’s a good way to gauge a property’s potential annual Return on Investment (ROI) – and to compare different deals to see if they’re worth doing.

Here’s how to calculate a Cash-on-Cash Return:

Now let’s take a look at the two examples below.

Note that in Example 2, the Cash-on-Cash Return is 28%, 2.8 times the return of 10% from paying cash only in Example 1!  And that’s after you factor in the interest rates on the debt. You can explore these examples and more in the Grant Cardone Multifamily Field Guide.*³

Crazy, right? Let’s break it down step-by-step.

*Results are not guaranteed, and real estate investing can be risky.

Example 1 – No Leverage on a Deal: 

Let’s say I’m a new investor and I use my OWN cash and NO debt to buy a $4 million, 32-unit property on my own.

I will not put any money down for a loan, and I want to pay the deal off immediately.

I’d have to find that $4 million first – which is VERY difficult for a real estate investor.

But let’s say I do get that $4 million, and my Net Operating Income is $400,000 a year.

Then my Cash-on-Cash Return would be 10%.

Initial Investment Amount = $4,000,000

Net Operating Income = $400,000

Cash-on-Cash Return = $400,000 ÷ $4,000,000 = 10%

I’d be getting a 10% return on my initial investment – that’s not too bad.

But using leverage, we can do better.

Example 2 – Using Leverage on a Deal: 

In this example, I’ll be using debt and creative financing for the same deal.

Depending on the debt market, a $4 million investment property is likely to have a typical down payment of $1 million.

But I’m NOT going to pay for all of that myself.

I’m going to put down $100,000 and look for 9 other interested investors to hit the $1 million mark with me. 

Now, check out my Cash-on-Cash Return after subtracting the interest payments from the Net Operating Income.

Initial Investment Amount = $1,000,000

Net Operating Income = $400,000

Annual Interest-Only Loan Payment = 4% x $3,000,000 = $120,000

Income After Paying Interest-Only Loan = $400,000 – $120,000 = $280,000

Cash-on-Cash Return = $280,000 ÷ $1,000,000 = 28%

Even though this is completely hypothetical, and returns depend on the real estate market I’m in, I don’t know anywhere else I can find an ROI like this.*

This is the power of leverage – it can potentially explode returns on a real estate investment.

And let’s not forget something critical – the investment is protected by the underlying real estate – a REAL asset.  You don’t get that in stocks.

Leverage is the ONE advantage real estate has over other investment assets.

I also don’t know anywhere else I can use good debt to invest in an asset.

Banks will lend me money to buy apartments… But they will not lend me money to buy their own stock. 

Because they know the apartments tend to have more security and monthly cash flow potential… and the stock of the bank does not.

Leveraging good debt in real estate also allows me to personally enjoy massive tax advantages – which are unheard of in other kinds of investments.*

So once I understood this game of leverage, I personally stopped leaving money in the bank, the stock market, in my businesses, in a retirement account, or in the next big investing strategy.

I focused solely on having money invested in real assets.


So if I were to start from scratch, here’s how I would get leverage in real estate right now.

(1) Leverage great assets.

I would start shopping for great apartment buildings in my neighborhood.

If I pick the right property, in the right location, at the right time, with the right schools, the right jobs, in the right marketplace… then I know the property will likely be worth more money in the future.

And with apartment buildings, I’m not limited to what I can afford with my income.

*Before investing, you should always do your own analysis based on your own financial and personal circumstances before making any investment.

I’m limited to what the rental PROPERTY can afford and the income it can produce to pay off its loan.

And great assets like these provide the kind of rental income I want to leverage – in order to qualify for those big commercial loans.*

(2) Leverage other people’s help.

I would find a partner and start working together on big deals, instead of starting small and buying junk deals.

I would partner with someone who’s already spent 30 years getting to know the top brokers, commercial lenders, and bankers.

And while good credit is necessary for multifamily deals, my experience has taught me that the good credit DOESN’T have to be my own.

So even if I had no credit score, or bad credit, I would partner with someone who has good credit.

Good places to meet partners might be local real estate meetups, investor clubs, and even national conferences.

(3) Leverage other people’s money.

I would partner with other people to help me pay for the down payment, and finance the rest of the deal with a commercial loan.*

As seen in my Cash-on-Cash examples above, this is how I could explode my returns.

So I would put my money where my mouth is first, and then approach these other investors who also want in on a good deal.

A man once said to me, “Look, you don’t need money. You need CONTROL of the money. You need control of the asset. Whoever controls Boardwalk in Monopoly wins the game.”

So I don’t need to figure out how to get $1 billion to own $1 billion in assets.

I need to figure out how to get the down payment, and the rest of it in debt.

(4) Leverage multiple tenants.

Having multiple tenants is the ultimate multiplier in real estate.

I’m not talking about financial leverage here.

Instead, I’m referring to leverage as “us[ing] (something) to maximum advantage”, as defined by Oxford Dictionary.4

See, I’ve since learned that I can put in the same amount of effort and money (or less) in multifamily – as an SFR deal…

But with multiple tenants, I get to maximize my advantage with a minimal amount of my own resources.

* Results not typical or guaranteed. Individual results may vary. Seek professional advice before investing.

That’s the power of leverage.

(5) Leverage experience.

I would partner up with a more experienced investor and leverage their experience.

I would also leverage my education, especially if I don’t currently have $100K for my first 32-unit multifamily deal, as seen in the Cash-on-Cash examples above.

Instead, I would make a small investment in my KNOWLEDGE today, with a real estate course for example, which leverages someone else’s wisdom, experience, and resources.

Because there are many ‘spectators’ in the real estate game who aren’t willing to invest $100, $1,000, $10,000, etc. to learn the game.

And they’ll likely never get around to playing in the big leagues of real estate.

To play the game and get others to invest with me, I’ve learned I need to put my money where my mouth is…

Whether it’s by gaining knowledge… or putting my own money down for a property.

(6) Create leverage at my job.

Another way I would get leverage to invest in real estate… is to increase my income at work.

I mean using my existing resources to maximum advantage…

Thus maximizing my power to influence a person or situation, as defined by Oxford Dictionary.5

So if I’m currently paid a certain amount and I have the potential to produce four times what I’m owed, I become invaluable to the company.

I can increase and set aside my earned income to invest in real estate.

Becoming invaluable is KEY to getting leverage anywhere in life.

Banks finance my deals because I bring deals that would make me invaluable to any bank.

So what can you do today to become invaluable to your boss, to your company, to your clients?

(7) Never over-leverage.

Many people who played the real estate game back in 2008 over-leveraged their real estate.

They took on more debt than the real estate could pay for.

They also speculated on the future without the KNOWLEDGE they needed – to keep their properties and cash flow… 

And they lost everything.

So the key thing I would always keep an eye on is my deal’s Debt Service Coverage Ratio (DSCR).

It shows me whether my deal’s potential cash flow provides a sufficient CUSHION for me to pay off a property’s loan every year.

This is a critical calculation that helps me handle my fear surrounding debt… and it helps me avoid over-leveraging.

(8) Leverage time.

Imagine the same rock from the example I gave earlier.

Imagine that I continue to use the same tiny tool, but the rock keeps getting bigger over time.

If I go by the definition of leverage6 as using my existing resources to maximum advantage

My leverage (added advantage) has the potential to keep increasing over time.

So, although I’ve initially invested a small amount of my own resources to buy an apartment building…

The VALUE of the property will likely keep increasing over time.


First, I choose great properties that provide sufficient income, and they will likely pay off my debt over time.

Second, I believe rents will likely keep increasing like they have for the past 80 years, as you can see in the chart below.

Source: U.S. Bureau of Labor Statistics, Consumer Price Index for All Urban Consumers: Rent of Primary Residence in U.S. City Average [CUUR0000SEHA], retrieved from FRED, Federal Reserve Bank of St. Louis;, December 21, 2022.

And I know a well-chosen multifamily property’s value tends to increase with the rising rents.

This could then explode the property’s profit potential — when — and if — I choose to sell in the future.

THIS is the power of leverage and time in real estate.

It’s why I believe that one of the best virtues you can cultivate in yourself – to leverage real estate – is PATIENCE.

Patience has helped me have more wisdom, more confidence, and better connections.

Patience has helped me look beyond the returns I can get on a deal NOW – so I can focus on investing in the future.

I can focus on holding my properties through the next economic contraction.

Because there is likely going to be another contraction… and I believe it could be brutal to anything that can’t be leveraged… and doesn’t produce enough positive cash flow.

This could include single-family homes, duplexes, and fourplexes, which I’ve often seen get lost to foreclosures in economic contractions.

So, even if I were starting from scratch and couldn’t leverage much, I could still leverage my time and my patience.

I would study real estate, I would network, and I would patiently set aside money for my first investment.

So let’s make the best of 2023… and help one another get through this next economic contraction.

Because how much you value your time on this planet is either going to kill you, or it’s going to get you where you want to go – the choice is yours.

Be Great,

Grant Cardone

Additional sources:

1 Board of Governors of the Federal Reserve System (US)

2 Board of Governors of the Federal Reserve System (US)

3 Grant Cardone’s Multifamily Field Guide

4 Oxford Dictionary

5 Oxford Dictionary

6 Oxford Dictionary

*Disclaimer: This content is intended to be used for educational and informational purposes only. Before investing, you should always do your own analysis based on your own financial and personal circumstances before making any investment. Grant Cardone is an industry expert who has been investing for over 30 years and his opinion is based solely on his own personal experience and circumstances. Individual results may vary. You should perform your own due diligence and seek the advice from a professional to verify any information on our website or materials that you are relying upon if you choose to make an investment. Investment involves great risk and there is no guarantee of performance or results.

We are not attorneys, investment advisers, accountants, tax professionals or financial advisers and any of the content presented should not be taken as professional advice. We recommend seeking the advice of a financial professional before you invest, and we accept no liability whatsoever for any loss or damage you may incur.

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Star of Discovery Channel’s “Undercover Billionaire,” Grant Cardone owns and operates seven privately held companies and a private equity real estate firm, Cardone Capital, with a multifamily portfolio of assets under management valued at over $4 billion. He is the Top Crowdfunder in the world, raising over $900 million in equity via social media. Known internationally as the leading expert on sales, marketing, and scaling businesses, Cardone is a New York Times bestselling author of 11 business books, including “The 10X Rule,” which led to Cardone establishing the 10X Global Movement and the 10X Growth Conference, now the largest business and entrepreneur conference in the world. The online business and sales educational platform he created, Cardone University, serves over 411,000 individuals and Forbes 100 corporate clients throughout the world. Voted the top Marketing Influencer to watch by Forbes, Cardone uses his massive 15 million plus following to give back via his Grant Cardone Foundation, a non-profit organization dedicated to mentoring underserved, at-risk adolescents in financial literacy, especially those without father figures.