---
title: "Leverage — What It Means | Ondo RE"
canonical: https://www.ondorealestate.com/glossary/leverage/
---

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Investing[All terms starting with L](/glossary/#letter-L)

# Leverage

Using borrowed money to control a larger asset, amplifying both returns and losses.

A mortgage lets a modest down payment control a much larger asset, so appreciation and cash flow are earned on the full value while only part of the capital is yours. That is why cash-on-cash returns on financed property can exceed unlevered yield.

The amplification runs both directions. Leverage magnifies a downturn, and debt service continues through vacancy, which is what turns a difficult month into a serious problem.

## Related terms

- [Cash-on-cash returnAnnual pre-tax cash flow divided by the cash you actually invested, measuring return on money out of pocket.](/glossary/cash-on-cash-return/)
- [Cap rate (Capitalization rate)Net operating income divided by property value, the unlevered yield used to compare properties.](/glossary/cap-rate/)
- [DSCR (Debt Service Coverage Ratio)Net operating income divided by annual debt service: how many times the property covers its own loan payment.](/glossary/dscr/)
- [EquityThe difference between what a property is worth and what is owed against it.](/glossary/equity/)

## More in Investing

- [1% rule](/glossary/one-percent-rule/)
- [1031 exchange](/glossary/1031-exchange/)
- [50% rule](/glossary/fifty-percent-rule/)
- [Appreciation](/glossary/appreciation/)
- [CAGR (Compound Annual Growth Rate)](/glossary/cagr/)
- [Cap rate (Capitalization rate)](/glossary/cap-rate/)

## Have a question about your own situation?

Ondo handles brokerage, lending, property management and notary under one roof, so the answer does not change depending on who you ask.

[Talk to Ondo](/contact/)[Browse all terms](/glossary/)