Los Angeles is turning into a buyer’s market. And, if you know how to use positive leverage, you’re positioned to make big gains.
Here’s what you need to know to get ahead of the curve and why now might be the perfect time to invest.
Let’s start by defining what we mean by positive leverage.
At its core, positive leverage happens when the return from your investment property—measured by its capitalization rate (cap rate)—is higher than the interest rate you pay to finance it.
When this happens, every dollar you borrow earns more than it costs, boosting your overall return.
For example, if you secure a loan at a 6% interest rate but the property has a 6.5% cap rate, you’re making 0.5% profit on every borrowed dollar.
What’s a cap rate, you might be asking?
The cap rate helps investors measure the annual return of a property. It’s calculated by dividing the net operating income by the property’s value.
For example, if a property’s cap rate is 6%, investing $100,000 would generate $6,000 in annual income.
Cap rates are more than just numbers, though. They tell you whether a property is a profitable buy.
Right now, cap rates are rising across the Los Angeles area, signaling a shift in favor of investors.
Why investors should pay attention to cap rates right now
In today’s L.A. market, cap rates are outpacing loan interest rates, which is creating more opportunities for positive leverage.
As sellers lower prices and cap rates increase, the chance to secure high returns through smart borrowing is growing.
Take a look at these recent deals:
| Property | Asking Price | Sold Price | Asking Cap Rate | Sold Cap Rate |
| 13073 San Fernando Rd. | $4,850,000 | $4,225,000 | 5.32% | 6.11% |
| 571 Fairview Ave. | $6,000,000 | $4,995,000 | 4.91% | 6.15% |
| 1051 57th St. | $1,300,000 | $1,065,000 | 6.37% | 7.77% |
| 4318 Leimert Blvd. | $1,395,000 | $1,325,000 | 5.78% | 6.09% |
| 6742 Beck Ave. | $1,399,000 | $1,060,000 | 6.10% | 7.41% |
Notice how each property sold below the asking price, with cap rates jumping after negotiation. This trend suggests that sellers are motivated, and buyers are gaining the upper hand—exactly the environment where positive leverage thrives.
Why this is a big deal for investors
Positive leverage can make a huge difference in your portfolio.
Here’s what happens when leverage goes right—and when it goes wrong:
- Negative leverage: If your loan rate is 6.5% but the property’s cap rate is only 5.8%, you’re paying more in interest than you’re making from the property.
- Positive leverage: If your loan rate is 6%, but the property’s cap rate is 6.5%, you’re pocketing the difference and boosting your overall return.
With cap rates rising and sellers willing to negotiate, the L.A. area is primed for positive leverage opportunities. The right investments today could lock in high returns for years to come.
Upcoming investment opportunities to watch
If you’re ready to take advantage of these market conditions, here are a few standout properties currently available:
- 4116 W. Garthwaite Ave.
6 units | Asking Price: $1,625,000 - 14715 Chadron Ave., Gardena, CA
32 units | Asking Price: $7,995,000
Cap Rate: 6.05% - 9205 Burnet Ave., North Hills, CA
46 units | Asking Price: $12,250,000
Cap Rate: 6.17%
Each of these properties offers the potential for positive leverage and long-term gains, especially with financing still available.
Key takeaways: Why the time to act is now
- Cap rates are rising: L.A. area properties are offering better returns than before.
- Leverage is working in your favor: Higher cap rates mean positive leverage is easier to achieve.
- It’s an investor’s market: Sellers are negotiating and offering discounts—conditions ideal for buyers.
This window won’t stay open forever. As financial markets shift, so do cap rates and interest rates.
Now is the time to act if you want to leverage these trends to grow your portfolio.
And if you’re serious about making a move, contact us today to explore available properties and discuss financing options. With the right strategy, you can lock in positive leverage and build long-term wealth.