Why might a commercial real estate investor borrow to help finance an investment even if she could afford to pay 100 percent cash?

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Why might a commercial real estate investor borrow to help finance an investment even if she could afford to pay 100 percent cash?

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Borrowing–i.e., the use of “other people’s money”—is also refereed to as the use of financial leverage.  If the overall return on the property exceeds the cost of debt, the use of leverage can significantly increase the rate of return investors earn on their invested equity.  This expected magnification of return often induces investors to partially debt finance even if they have the accumulated wealth to pay all cash for the property.

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