In certain constellations, which arise by finance-economic and/or object-related basic conditions, the leverage effect can be used for the financing of real estate. Here the portion of outside financing is raised as far as possible to reach a maximum yield of your private equity. The advantages: Liquid capital can be distributed to several assets to achieve higher yields and a dispersion of the risk to several objects.
Advantages of the leverage effect with restricted risks
The application of such leverage is always sensible when the financing expenses lie under the secure yield; such as with our hotel object in Herford. Here the yield of your private equity can be raised to
9 % and more, if the financing is suitable and the business develops as budgeted. An outside financing portion of 30% to 50% is realistic on account of a lease contract with a famous operator. Because of the 20-year-old loan contract and conditions with firm interest for the whole period the risks are limited. Already with about EUR 7.5 million private equity, an investment with outstanding high yield can be realized.