You can achieve the same in the stock market by buying on margin. In both cases, financing the majority of an investment with debt cranks up the risk. If you p

You can achieve the same in the stock market by buying on margin. In both cases, financing the majority of an investment with debt cranks up the risk. If you put $200k in an investment (say, the stock market, or bonds, or whatever) and it goes down by 10% then you've lost $20k. But if you're leveraged 5x (as in your example: putting in $200k on a $1M investment), then that's a multiplier in the positive and negative direction. A fall in housing prices in your city, area, neighborhood, of 10% will now wipe out 50% of what you put in. Leverage is considered very risky. Housing is considered fairly safe to begin with, so when you use leverage on it it only becomes moderately risky. But basically there's no such thing as a free lunch. The reason your $200k can double if housing prices move just a little bit up, is because it can also be wiped out if they move just a little bit down.