Hannah HammondFounder & CEO, HB Capital & The Firm RE · CEO of HB Capital | Helping CRE Developers & Investors Fund Deals Nationwide | Host of The Hannah Hammond Show

The Wealthy Use Good Debt to Continue to Grow More Wealth

Name: The Wealthy Use Good Debt to Continue to Grow More Wealth
Uploaded: 2026-02-15T20:41:19+00:00
Duration: 1 min 42 s
Channel: Hannah Hammond
Description: In this segment, the speakers explain how wealthy investors use leverage to magnify returns on commercial real‑estate assets. Speaker B illustrates a…

15 Feb 2026 · 2 min

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1:42

In this segment, the speakers explain how wealthy investors use leverage to magnify returns on commercial real‑estate assets. Speaker B illustrates a $100 million building purchased with $30 million equity and a $70 million loan, showing how cash flow exceeds debt service and how appreciation from $100 million to $120 million yields a 66 % equity return. Speaker A connects this to Robert Kiyosaki’s “Rich Dad, Poor Dad” principles, emphasizing that debt enables asset acquisition without full cash outlay. He describes a typical capital stack where senior debt covers ~70 % of the purchase price, while the remaining equity can be sourced from outside investors, potentially reducing the investor’s own cash contribution to as low as $10 million. The discussion highlights the benefits of positive leverage, cash‑on‑cash returns, and tax strategies tied to the high valuation of the property, concluding that smart use of leverage can generate massive wealth.

Chapters

Buy $100 million building with $30 million of cash. You get a loan from the bank. The bank's going to give you $70 million. So you're getting cash flow on $100 million asset for $30 million. Those cash flows are going to be greater than what you're paying to the bank. That's the goal. So you have positive leverage. When the value of that building goes up, let's say the value of the building goes up to 120 million. So you made $20 million profit. It's a 66% return. That's the power of leverage. You get a higher return on your equity. That's what the wealthy are doing. That'.
I love what he's saying here and I couldn't have said it better myself. This is how the rich get richer. And this goes back to the rich dad principles from Robert Kiyosaki's book Rich Dad, Poor Dad. The rich use debt to be able to accumulate wealth and buy assets without having to come up with all their own cash. And so just like he said, if you go to want to buy a hundred million dollar building, well, you really only need about $30 million to buy that building. But the whole hundred million dollar building is going to be able to appreciate. And you also get tax strategies based off of that $100 million valuation and the delay or one more thing that you know, we finance commercial real estate. At HB Capital, you have your senior debt for your, let's say 70% in his example, and then you have your additional 30%. Well, savvy investors will go out and they'll actually raise capital for that additional 30% or maybe 20% and they bring in 10% to the deal. So you could potentially buy $100 million building with only $10 million or less of your own capital and get the cash on cash return. That is a very high return based off that $10 million you invested because you're getting a return and cash flow off of $100 million building and other people's money to help you do that. So I love real estate, I love leverage. If you do it smart and do it well, you can create massive, massive wealth.