What is favorable leverage?
When financing raises the equity return: the levered IRR exceeds the unlevered IRR because the property’s return outpaces the cost of debt. Leverage magnifies performance in both directions; it does not create underlying value.
Where you will use it: this term comes up in the Real Estate Finance course, and the full course glossary collects every term in one place.
Related terms
From the free Real Estate Finance course by Devon Coombs, CPA, MBA.