Property investment: gearing and the equity rate of return

Purpose The purpose of this paper is to comment upon the relatively straightforward but often misunderstood role of gearing (or leverage) on the potential equity return of a property investment. Design/methodology/approach This education briefing is an explanation of the upside and downside risk of borrowing (at different levels) to successful investment. Findings The use of gearing can greatly enhance equity returns but at an increased risk. Originality/value This is a review of existing models.