Investor Betty borrows money from a bank to purchase a small office building. She is able to make the mortgage payments from the rent generated by the leases and still realize a profit. This is an example of what financing concept?

This scenario is a clear illustration of leverage in real estate financing. Leverage refers to the use of borrowed funds to finance the purchase of an asset, which in this case is the small office building. By using the bank's money alongside her own capital, Betty is able to acquire a property that she might not have been able to afford outright.

The key aspect here is that she generates income from the property—specifically, the rent from leases—which not only covers her mortgage payments but also allows her to make a profit. This showcases the effectiveness of leverage; by borrowing money, she can control a larger asset and benefit from its cash flow, while only having to invest a portion of her own funds.

In contrast, appreciation refers to an increase in property value over time rather than the use of borrowed money. Liquidity pertains to how quickly and easily an asset can be converted into cash, and marketability relates to how easily a property can be sold or rented in the current market. These concepts do not directly describe Betty's ability to profit from her borrowed funds while managing her mortgage payments through rental income, making leverage the most fitting choice in this scenario.