You can't use house #1 as the collateral for both the mortgage on house #1 and house #2, because the bank is smart enough to know that you don't actually own house #1. If house #1 has appreciated significantly from the purchase price, or you have paid off a good chunk of the mortgage, you may have enough equity to take a loan (eg home equity line of credit / HELOC) on that equity to get down-payment money for a second house. That's generally a slow process, unless you happen to own property in a market bubble.

You're mostly on point. You get a loan to buy a property, and then sell it later. This is already using leverage, since you're taking in the full appreciation of the property, while only using a fraction of your own money.

But this is peanuts, what you want is more leverage. But you're not going to get it from personal mortgages and houses with easily determined value.

So you take you money and you buy, say, a run down theme park on the cheap. You draft some amazing development plans, and then you have the whole thing evaluated by your buddy, who is of course a famous theme park expert (or claims to be anyway). Turns out your park is worth potentially hundreds of millions! Now, since you own potentially hundreds of millions, it's easy to get more loans.

how does that not crash and burn

It does. A lot of people try to get into leveraged investing and end up in bankruptcy. What you're seeing from finfluencers is selection bias: either they're one of the few who didn't crash and burn (largely luck) or they're lying.

A lot of real estate leverage strategies go after other loan options after banks stop giving them mortgages. That means hard money lending, angel investing, etc, where you're taking on high loan rates and giving up equity in a business in other to try to generate enough cash flow to outrun the payments. If everything works perfectly, you can stabilize and pay off the higher interest loans. But if you have any issues (higher than expected vacancy rates, needed repairs, etc), you absolutely can crash and burn.

The best option imo is to house hack. Here's a leveraged strategy with far less risk than those finfluencers, but still quite risky and hinges on you doing a lot of work:

1. buy a multi-unit property, live in one of the units, and rent the rest - you get primary residence rates, and you can move out in a couple years
2. repeat step 1 on a new property
3. sell property 1 after 2-ish years of moving out to get the maximum tax benefits
4. buy an investment property or two with proceeds from 3
5. repeat until you're tired of living in multi-unit properties

Congratulations, you now own multiple multi-unit properties all with mortgages you can actually afford because your risk is diversified across several properties and your loan rates are relatively low.

However, you'll need decent income to do steps 1&2 to qualify for the mortgages, and you'll need to spend a lot of time dealing with tenants, so you'll basically be working two high stress jobs.

This is still incredibly leveraged, but you're reducing risk a bit by being physically present and thus can react to problems more quickly. It's not for me, since I much prefer passive investing (stocks) to real estate leveraged strategies, but some people see success with it.

It basically means using existing assets as collateral for a loan.

Step 0: think about what you are really adding to the world