Positive Leverage

Leverage is positive when the return on the investment exceeds the cost of the money borrowed to buy it. You pay the lender their interest, keep everything above it, and control a larger asset with less of your own cash.

Simple test: if a deal's unleveraged return beats your interest rate, borrowing amplifies your equity return. If the interest rate is higher, the same borrowing amplifies your losses. That's negative leverage, and in many markets at today's rates it's the default, not the exception.

The cut-both-ways clause

Principal and interest are due no matter how the property performs. Underperformance or a value decline doesn't reduce the payment; it just shrinks your margin, and past a point, threatens the deal. Watch the spread between your returns and your rate, not just the returns.

Where you'll see it in Rescover

Every analysis shows returns with your actual financing in them: cash-on-cash and IRR move as you change the down payment and rate, so you can see exactly where leverage flips from working for you to working against you.