Abstract
The advantages of utilizing leverage in real estate investments has received much attention in the past, but little guidance has been offered that shows the investor the most opportune leverage position for a given investment alternative. Traditional leverage concepts are explored in this article, prior to developing a financial indifference point model and a continuous‐function degree of financial leverage (DFL) formula. The indifference point and DFL as shown here are relatively simple to calculate and provide additional insights into risk, return and leverage concepts for real estate investments.
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