Sell 100k house for 200k.
That is your scenario, yes?
When you sell the house for 200k you might net 160k after commission.
Of course we don't know how long the house was owned...property taxes, insurance, mortgage payments, maintenance /upkeep...some of which could be offset by rental income...
But yes. if you put 10k in and get 160k out...I'll let you figure the percentage appreciation on that.
What "leveraging" means is that even though you might only invest 10% of the value of an asset, you benefit from 100% of the asset's appreciation.
Now go do your own economics homework. :-)
Cost of ￡100,000 house (deposit ￡10,000).
Sell property for ￡200,000
Profit =￡100,000
%profit= ￡100,000/￡10,000 x100=1000%
Just need to calculate the cost of borrowing the ￡90,000 which will depend on interest rate and time elapsed.
I overheard a conversation about using borrowed money to leverage investments. It was said that if 10% was put into property and that property doubled, the ROI would be 1100%. Out of curiosity, where does that figure come from? If it is only doubling and PLUS you owe debt, how does that work?
