The use of leverage for creating passive income simply is defined as simply amplifying a gain or loss of an investment through the use of borrowed money.
Now that question remains should you use leverage to create income or investment gains?
There is no correct answer but given how the recent recession has effected the prices negatively in both the stock market and real estate market I would side on not using leverage.
Just as leverage multiplies your gains during good times it also multiplies your losses in economies like were currently in.
Why did the real estate market collapse? Why the answer can be blamed on many different factors no one can disagree that we all paid a heavy price.
Even if you have kept your home and continued making mortgage payments on a over valued home, your values will be effected for years by the homeowners that walked away from the houses.
Although I understand how frustrating it is to owe more on your home than it is currently worth sometimes you have to suck it up and do the right thing.
Nothing goes down forever and the markets will at some point go up again but will people make the same mistake again?