What characterizes positive leverage in real estate?

Positive leverage in real estate occurs when the returns generated by an investment property exceed the cost of borrowing. This means that the use of debt helps to amplify the investor's potential return on equity. When an investor takes on debt to finance a property and this debt allows for greater returns than what is being paid in interest, the leverage is considered positive.

In this scenario, the income generated from the property (for example, through rental payments) is greater than the costs associated with the debt (like interest payments). This situation maximizes the profitability of the investment. Thus, debt effectively increases the returns on the investor's initial equity contribution because the investor is able to control a larger asset base than they could if they were investing only their own capital.

In contrast, the other options either reflect situations of negative leverage or indicate a lack of leverage altogether, which would not characterize positive leverage.