From Yahoo Finance: 2025-06-20 16:17:00

In 1978, Donald Trump bought the Commodore Hotel in Manhattan, funding it with $70 million in bank loans, a $1 million loan from his father, cash from the Hyatt Corporation, and a tax abatement partnership with New York City. He reopened it as the Grand Hyatt in 1980 and later sold his share for $140 million.

Billionaires use leverage to build wealth by investing in assets that generate cash flow, unlike the middle class who use debt for liabilities. Business credit, real estate loans, and asset-backed lending help billionaires generate cash flow and higher returns on investment.

Debt can help investors earn higher returns by leveraging assets like rental properties. As rent rises, the fixed mortgage payment remains the same, leading to higher cash flow and returns over time. Inflation benefits real asset owners by increasing property values and cash flow.

Instead of selling appreciated assets and triggering capital gains tax, billionaires refinance to pull cash out. By tapping the equity in assets like rental properties, owners can continue to generate cash flow and acquire more income-generating assets over time.

Billionaires take calculated risks by separating each business deal into its own legal entity to limit risk exposure. By using LLCs and layered financing, wealthy individuals shield personal liability from business risk and reap tax benefits.

Debt can be a powerful tool when used wisely to supercharge investments and business results. Finding a mentor to guide you on leveraging other people’s money can help you build wealth without risking personal finances.



Read more at Yahoo Finance: How To Use Leverage Like a Billionaire