What does "leverage" mean in the context of real estate investing?

In the context of real estate investing, leverage refers to the use of borrowed capital to enhance the potential return on investment. This means that an investor can purchase property without needing to put down the full cost upfront by using financing options, such as mortgages. By using borrowed funds, investors can acquire larger or multiple properties than they could if they were limited to using only their own cash resources. This strategy can lead to greater returns on investment if property values increase or rental income rises, as the investor gains a proportionally larger profit from any increases in property value compared to their initial investment. Essentially, leverage allows investors to control a more substantial asset base with less personal capital, which has the potential to magnify gains.