The Great Recession turned the real estate world on its head. Many age-old truisms turned out to be less than absolute. One of these was “real estate always appreciates”.  This old adage or truth is the basis for leveraged real estate investing.

Most real estate investors are familiar with the concept of using leverage to purchase an investment property. It’s a way to maximize return on investment by utilizing other people’s money to finance acquiring an investment property. This works as long as one thing happens: The property appreciates.

 What happens if it doesn’t? Well, we all know the answer to that question now, don’t we? The whole thing collapses.

Since 2007, real estate in Chicago has been depreciating, and using leverage to invest in real estate has not been the best option, but has that time passed? Is property appreciating at a sustainable rate again?

Yes. Yes, it is.

Don’t take our word for it. Look at the numbers, and discover for yourself that right now is the best time in recent memory to use leverage to invest in Chicago-area real estate.

Since the crash of 2007, sale prices and values for properties in the Chicago area have been plummeting in as close to a straight line as you can find in the real world. Using leverage to acquire properties in Chicago was financial suicide until recently.

In 2012, things finally hit bottom. Prices finally leveled out, and in the last quarter of 2012 and the first quarter of 2013, they began to rise ever so slightly.Leveraged Investing, real estate investing

According to Zillow.com the entire Chicago area posted a year-over-year gain of 11.6 percent from March 2012 to March 2013. This was the first time a gain in year-over-year sales price had occurred in five years.  That indicates that the sales price of properties within Chicago has reached bottom, and if you are a real estate investor, the bottom is a great place to be – as long as you did not ride several properties all the way down.

Sales price is not the only factor that affects value where investment property is concerned, but it is an excellent indicator of value and does not require the investor to hire an appraiser or perform a feasibility study.

With interest rates at historic lows, rent increases routinely beating the CPI increases, and all signs pointing to a strong recovery over the coming years, now is the time to leverage your assets and acquire investment properties in Chicago.

Imagine if the property appreciation rate in Chicago was just half of what it was last year – approximately 5.8 percent -- and that rate persisted for the next five years. You acquire a property worth $100,000 with 20 percent down. Assuming your rents will cover any mortgage and other expenses, what would your profit be if you sold the property at the end of five years?

Your property will be worth approximately $132,500. With just $20,000 in the property. That’s a profit of over 160 percent in five years. Of course, by making payments over those five years, you have probably paid down the principal of your loan. You will actually make more than $32,500 if you decide to sell the property, but why sell? You should be using that equity to acquire new investment properties.

Equity Build Finance maintains an inventory of turnkey investment properties throughout the Chicago area. These properties are tenant ready. To discover more about our services and review a selection of available properties please visit our site and sign up for our newsletter.

Information and statistics gathered from trulia.com, Zillow.com, CCIM and the US census. It is deemed reliable if not accurate.