it's such dumb advice.. much better to have a mortgage where one pays off the loan amount, which will reduce overall interest, and have no penalties for early repayment
@paulkirton8945 it's foolish to purchase anything using leverage and based on your own or anyone else's guess on where the price is headed. That is gambling. Whether it's a rental, a flip, or a personal residence, you have to be able to make payments on it if the market moves against you. If you get an adjustable loan in a low interest environment you are asking for trouble
I'll put this comment here too. In 1975 my wife and I bought our first rental, and we became hooked on real estate as an investment. Over the years we've owned quite a few. Go back to 2002 through 2006 there was a real estate bubble, but in 2007 the bubble burst. Because we had kept all equity in the properties by not refinancing, we survived the crash. I knew a fellow from San Diego who had purchased 17 houses, and kept taking out the equity to get down payments for additional houses. When the real estate bubble burst, he lost all 17 houses when the real estate bubble burst. There is danger in what she advises.
He couldn't have lost the homes because of a drop in prices. He had to have been mismanaging them. Theoretically, values could crash to zero but you'll still cash flow if the rent exceeds expenses
@@XxowendanxX Yes, he didn't have a clue as to property management. And to add to that, he was buying on speculation. He would refinance one to get some cash for small down payments to developer and builders to order the properties ... ...to be built. For a while in 2004 and 2005 prices were rising so quickly, one could purchase on speculation and know the price would have gone up by 30% to 50% by the time the house was built. It was like the tulip bubble of 1634.
@ideapage he messed up badly. Never invest in new builds unless you really know what you're doing. And price speculation is always a bad idea in real estate, stocks, precious metals, commodities, currencies ANYTHING. With Rental properties you want price appreciation but that is just icing on the cake. You're supposed to do it for cash flow. The tax benefits and the equity capture are also good reasons but speculation is little better than gambling. If your friend had the loan structured properly it wouldn't matter if the market moved against him
There’s more to it, this is business not a single purpose family home, the house goes up in value over the mortgage term as dose inflation so the original loan amount becomes less. This is also done with a portfolio of properties so as one increases in value you can use that as collateral to buy others with out actually drawing any money out. And the tenants are paying the costs of the original mortgage borrowing but you have the capital gain in assets which you can cash in at anytime by selling up.
@@JOTRDAN2602Yeap, and if it was your family home - you still had to buy another one, assuming you didn't downsize , which would have had a similar increase. But if the next 15yrs were as generous again, you would be doing well!
Funnily enough I bought my house with a 10 yr fix mortgage at 2%. Threw my everything at it to get it paid off and became mortgage free in less than 7 years. A mortgage is a loan: why the hell would I want to keep paying for a loan every month?! And as for interest only....sod that!
Are you advocating socialism/communism? I know it is frustrating. If you don't think the system will change in my view you better learn and benefit from the system otherwise your life and your families life may not be all it otherwise could be. Do you want to do all you can to look after your loved ones or do you want to moan about it?
@@PaulSmithTouchstoneEducation Selfish rich people like you always play this socialist card. Your Greed blinds you to people's problems. Go invest in commercial buildingd, hotels etc. Leave residential houses alone. You jack up the prices.
The advice given here is possible only if you are in a relatively comfortable position already. For the benefit of society, yes, a little less capitalism and a little more socialism would be fine. "Socialism" is such a Conservative frame. And you obviously don't know what communism is. There is no slippery slope from Socialism to Communism to Marxism. Stop watching Fox news.
@@PaulSmithTouchstoneEducation It’s not about advocating socialism or communism it’s about having a fairer society. I have no issue with people buying and letting properties in a healthy buoyant housing market with good supply to match demand. We don’t have this currently in the UK and therefore the practice of multiple house ownership in the hands of an ever reducing number of people only exacerbates the issue. Houses should be seen as homes first and foremost and the fact they are seen as an investment has partly contributed to decades of unsustainable house price inflation that means home ownership is now beyond a lot of people. This problem is acute in some areas that are attractive to tourists - Cornwall for example. More house building including a proportion of social housing is in part the solution.
The vast majority of rental property is in areas of transient populations such as town and city centres. The majority of rental stock does not impact on families, because families don't settle in these areas. The private rental sector is less than 19% of the total market and the majority of this is in these busy transient places. Students, YP's, overseas contract workers and anyone else not putting roots down are mostly served. You've been fed a lie that landlords are to blame, so you're not looking at the real issues.
@@XxowendanxXmuch better to get a mortgage you can pay off the actual loan amount and that reduces the interest you pay over time.. and make sure it's one you can pay off early with no penalties.. that way if you pay off even a little more every month you reduce your overall mortgage payments and time taken to pay it off quite sugnificantly it's also safer if you find that interest rates suddenly go up a lot that person who said "get educated" is ignorant of history
@CastleHassall I don't know if anyone issues IO loans for a large number of years. If you can get one with the rate locked in, won't you have more cash flow than if you're paying down principle?
Fact - in 10 years time your interest only mortgage will not be "much smaller" it will be the same irrespective of any capital appreciation of the asset. The future LTV of any remortgage on the property will be smaller assuming the value of the house increases over time. Less hype, more facts please 😊
@WorldofTai the worst I wouldn't say so. Property prices have reduced 10% ish the last 9 months or so. You can get a btl at about 5%ish now, right area right price and you're fine
@@vc391 also we can do a little maths to prove her wrond. You buy single family home for 300K. You are paying 2400 in interest only. In 10 years you would have paid $290,000. What is the likelhood your house will get doubled.? It depends on the area and also in the market when the price is rising but the price but that is not the rule though. L
No she's correct. I've been doing this almost 25 years. Interest only, rent covers mortgage, asset increases in value while inflation devalues the debt. When I was borrowing £70k to buy a property when I started, people would only dream of being able to buy with just a £70k mortgage. But you know what? In 25 years people will only dream of borrowing £250k to buy a property like you can today. You control assets with debt, it's not about trying to pay them off. And the companies they are in, you can have your children as directors for when you finally hand over your legacy. That's how wealth is created. Stop arguing and learn.
@@user-gz6tx6yp3vwell said. I’m starting to learn these concepts. It does take a minute to wrap your head around it at first because you have to unlearn what you thought you know about money first. Most people hear are thinking primarily from a consumer mindset. Imagine making interest only payments while investing all the money coming in passively from the property but unfortunately most are just looking to spend it.
I live in my own flat and the flat upstairs is rented out ,my life has been miserable from bad tenants ,7 in total..now my property value has been affected..fkn greedy landlords only care about their pockets.
Fact. In 10 years your house could be worth 50% of what it is worth now. Case in point, the 2008 financial crisis and the property values crash that followed. Where are we today with the economy cycles? At the very top of it. What comes next? You figured it out yet? You are spreading awful advise.
Double over 10 years? I have a rented flat that is same price as I bought it 10:years ago and it’s 5 minute walk from a station that gets you to London inside an hour.
And that’ll be why most of her tenants have had rent increases by about 300% and can’t afford the rent or have to move out. Landlords like this have been creaming it for years why the interest rates were so low…
In 10 years worth of renting that property will be knackered and need a full renovation. Abi is selling you something, that's what she's making money from
This is the line of thinking that got a little of borrowers into trouble in the lead up to the 2008-2009 financial crises. Unfortunately, many banks would lend into this financially reckless activity.
I really hope property prices crash and stay within a reasonable multiple of the average wage. We are ruining our society treating houses and flats as investments. They need to be treated as homes. A secure place for young people to start their families. Life is hard enough as it is.
Hi Abi - there was an article about Samuel Leeds in the economist recently. Basically questioning the value of property educators? Any thoughts on it? How much of it applies to you and Paul?
Hi Jimmy, just refreshed my net-worth this morning: £66.8m this includes property, gold, crypto, shares, cash. All of this started for me with property. If you can do it on your own like I did then crack on. People sometimes tell me they can. If this is true they do not need help. I ask if that is true why have you not done this already? Good luck. Paul
Hi Paul, don’t worry, I completely believe you! As I’ve said before, genuine rich people feel the need to constantly about their net worth to people! Almost like they have something to prove or a course to sell. Anyway - that wasn’t the question - the question was the article in The Economist about Samuel Leeds - how much do you think could also be said about you?
You should definitely read it Paul. Maybe you and Abi could pick up some tips from the UK’s most successful property educator! You will have to buy a subscription or a copy of the magazine, but given that you are definitely worth £68m I’m sure you can afford it
@@jimmyflowers6668 I try to focus on my own business not everyone elses! The UK's most successful property educator, biggest company, whatever... we just run our little company to help as many people as we can
Careful! Housing markets go through cycles also! You are not guaranteed the house will double in value! That depends on which part of the cycle you purchased it in! And if it's the house you live in, you don't want to retire with a mortgage!
Paid my home off and was the best financial decision I have made for ME. I make one house payment a year. I also have another home I'm building in my spare time that's paid in full. I'm not in life to get rich. I want life balance. It's easy for women (especially if they're halfway attracti) as there is some simp that she will lead like a puppy dog to fix the place up.
Depends largely on your mortgage rate. Calculate how much the cumulative interest payments are over the 10 years that you expect the value of the property to double. And add to that the stress and the cost of having to upkeep the properties that you plan to rent out.
Housing prices are tied to incomes. Incomes have not kept up with inflation and niw there is a housing crisis. Young people can't afford down-payments and struggle with rents in many areas.
What happens if interest rates rise and rent doesn’t cover the mortgage. That’s bad enough for one property, but if you have 5 properties it is a lot worse. Doesn’t paying down the mortgage give you a margin of safety ?
Basically, u are managing a home to the real owner the bankers aka bankster, they collecting interested from u and also they can decide that your mortage interest should raise or even to pay all the debts and make u default in a blink of an eye.....
Ok so bought mine in south east uk for £367,500 that was 17 years ago been offered £590,000 so my house should be worth £1,249,500 doubling can’t be right every 10 years 🤷♂️
At least for the US, housing prices have averaged 6% over the past century. That's doubling every 12 years but that's also an *average*. The line doesn't only go up.
Your right for now, however if the population going upward trend reverses for the first time in 70 years and demand collapses for the first time in a very long time, something like a world war happens, you'll be totally screwed.
She fails to mention risk. No investment or asset is a one way bet. Just think of why she is lecturing on the internet rather than spending her time finding, researching and buying more property.
Usually you will need residency property first before bank will lend to you on an interest only BTL basis. Landlords use this strategy to keep the overheads low and of course take cash out early. All it takes is a change in government legislation and those who are over leveraged will be shafted. Be careful and make sure you select the right investment strategy for you.
Depends on where you live. I think the rest of us live in a non-prime land saw our real estate doubled in 20 years. So we paid it off early. Other assets doubled in 5-7 years.
@@PaulSmithTouchstoneEducation I know someone who bought a house in 1969 for £3,000 and sold it 45 years later for £3,000,000 - that'd be worth £68K by your calculations ... And Someone else who bought a property in 1997 for £300,000, spent £14,000 ripping off the boarding up £10K fixing the drainage and sold for £3,000,000 in 2008 so worth perhaps £650K by your calcs. so these are way MORE than doubling every ten years. Conversely I know of property bought for £108,000 twenty years ago now worth £160,000 so technically should be worth £432,000 by your calculations. AVERAGES ARE WORTHLESS
Bought a property 17 years ago at the going rate they were selling for. It's now worth LESS than it was 17 years ago. Double every 10 years, you are having a laugh.
