Leverage

From Wikipedia, the free, on-line encyclopedia:

Leverage (or gearing) is borrowing money to supplement existing funds for investment in such a way that the potential positive or negative outcome is magnified and/or enhanced. It generally refers to using borrowed funds, or debt, so as to attempt to increase the returns to equity. Deleveraging is the action of reducing borrowings.

So if I borrow $500, sign on with a lead generation company for $20 a month, and sell a home from a lead I got from there which nets me a $7,500 commission, I've leveraged that $500 pretty effectively.

The problem enters in when you borrow too much and you don't get any result from it. Then, your stuck paying off the loan with nothing to show for it. That's why we have to evaluate clearly the investments we make and make only cost-effective ones.

What do you think? I'd like to know. Post a comment. And read the entire Wikipedia article.

Entrepreneurship informs all my professional activities. For entrepreneurial real estate, go to www.yourstopforrealestate.com/blog and for entrepreneurial writing www.kearneymusicschoolmurders.blogspot.com.