Financial leverage associated with the use of debt to profit on the property. Here are two basic examples of the use of financial leverage, also known as simple lever.
I use my 400,000,000 VND to buy 40 acres of land at the price of 400,000,000 VND. I do not use financial leverage.
My friend used her 400,000,000 VND 800,000,000 VND and borrow more to buy 120 acres of land for the 1,200,000,000VND. You're using financial leverage. He's controlled 1,200,000,000 worth VND area with 400,000,000 VND from its own funds.
- If the value of my property and my friend sancua increased 25% and sales go:
I Say 100,000,000 VND (400,000,000 VND x 0 , 25 = 100,000,000 VND), from its capital 400,000,000 VND (equivalent to 25% profit margin.)
my Friends Say 300,000,000 VND (VND 1,200,000,000 x 0.25 = 300,000,000 VND), from its capital 400,000,000 VND (equivalent 75% profit margin). That's when my friend leveraged effectively.
- In case, your real estate and I fell 10% and sell:
40,000,000 VND Then I just lost
my But you will damage to 120,000,000 VND ( ie 30% of its capital)
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