If you pay a 20% down payment – or $200,000 on a $1,000,000 asset, you essentially use a small percentage of your own money and the majority of the purchase is being provided by the bank. So even if your property has a rental yield of 3%, the rate of investment is roughly $30,000 over $200,000 investment, a 15% return!

This is essentially a Financial Leverage, which profits using other people’s money (a.k.a OPM). The rich are the master of leverage because it allows them to build more wealth than they could ever achieve by their own resources and personal limitations.

However, understanding leverage is just the beginning. Most people save years for the down payment and spend their life on paying the mortgage. That is the traditional financing.
What the real savvy property investors do is often “creative financing”. With their network and an army of professionals, they may never pay anything for the property transaction, a true application of OPM.
But I won’t discuss much as it is too complicated and has very limited application in Singapore nowadays due to the regulations. Let’s leave it to the secrets guarded by the rich, or you can pm me for a discussion.​