Much has been said about real estate and its wonders. But do you really know the real score on how it creates wonders for your money? After all, different people hold various opinions on how much good do leverage and OPM (other people’s money) have.

First of all, always make a qualified mortgage professional part of your team of experts; the examples that follow may not be appropriate or even possible for your particular situation. Some people have the goal of receiving cashflow every month to supplement their incomes while others want long-term financial success through investment appreciation.

To vitalize your financial goal, look closely into your options. What’s amazing in the real estate market is the assurance that you are in control. For instance, you have $20,000 to start with. With this amount, you can have either a 10 percent down payment on a $20,000 worth of property or a 20 percent down payment on a $10,000 property. Of course, you will be the one to decide which is better.

The answer naturally depends on your particular situation and goal. But let us probe into the differences. With the assumption that you chose the larger down payment, it is possible for you to get cashflow because you will give “lower” mortgage payments and at the 20 percent down payment, you will no longer need mortgage insurance. Do you prefer receiving monthly cashflow? Well then, a larger down payment makes you attain just that.

Assuming that for the $100,000 and $200,000 properties, the appreciation is set at 6 percent (Please note that the appreciation rate actually varies depending on their locations, type of property, etc..but for this article, you can well disregard these differences). That translates to these figures: the $100,000 will be worth $106,000 after a year of appreciation and the $200,000 becomes $212,000.

You will have made double the amount of appreciation with the 10% down payment on $200K option, but you didn’t have to spend one penny more! This effect will compound year after year and after awhile the difference will staggering.

In a relatively shorter time, your gain will be sufficient to obtain equity and purchase another PROPERTY so you actually have doubled your properties and compounded their appreciation. On another hand, the cashflow might not be present in the $200,000 property and perhaps there will be times when you have to expend for maintenance costs but look at the greater appreciation and long-term benefits.

Not only are you getting more advantage by using more leverage (OPM) and getting less monthly cashflow, but you are also spared of minding other things. While debt payments and maintenance costs are tax deductions, cashflow is taxable. If you need the monthly cashflow, you can just modify your strategy to accomplish what you think works best for you. Perceptive investors agree that extra cash spent every month results to huge wealth building benefits in the future.

With these in mind, its not surprising that you chose the better one. Start pooling your team of experts now and make the right choice!