The Unique Property Site Blog

---

How to Make Money

Let’s pursue a couple of points from a previous blog.

I went into some detail about the use of money, and how it gets tied up on the purchase of real estate. The good thing about that idea is that most people set out to buy a house whereas the sensible person sets out to buy two. Perfectly possible if you start by buying cheap houses, and work your way up. Virtually nobody does it that way, which is why most people stay poor.

The good thing about buying a house isn’t that it is yours. It isn’t if you are buying with a mortgage. The mortgage company owns it and you can only stay in the place as long as you keep paying the mortgage, which, in reality, isn’t that different from paying rent. And how many people are paying over the top for their mortgaged properties? Do the comparison I set out in a previous blog. Are you paying more every month than the guy next door who is renting?

However, by the time you are ready to retire the house is yours and you now dont have to pay the mortgage or any rent, so you are suddenly wealthy. Great! Now you should sell the place and bank the money. Going back to last week’s blog you will note what I am doing. I have £750,000 tied up in a house and garden. I could sell up, invest the money, and live very comfortably off the income. Buying that house was a great way of saving for a pension.

In a different blog I talked about pensions, and indeed gave you a peep into how I would run a country’s pension scheme, and run it at a substantial profit. The secret is to borrow money from the bank. Where I live I can borrow for 3.5%. I could invest the money. Even if I only got 8.5% on my investment, and that’s a poor return, I would still be making 5% p.a. If you can keep rolling over the loan, and why not? You are making the bank money so what is there to complain of? Then over a working lifetime you have your pension. The best way to make a good pension is to borrow and front-load the pension amount, that way you get Einstein’s eighth wonder of the world (compound interest) on your side, working hard for you.

Remember the secret of the rich. You work for money. Rich people get money to work for them. If you haven’t got any, borrow some at the cheapest rate you can find (that can be through a credit card courtesy of their generous period of interest free loans). You borrow to invest. You do not borrow to spend. Only idiots borrow to spend.

That reminds me of another of those useful little phrases. Most people pay for things. Rich people get other people to pay for things. I give several examples of how that works in my book Being Rich is Easy. Here’s the link:

https://www.amazon.co.uk/dp/B0CLS37VX1

(For US readers please change .co.uk to .com)
Some while back I mentioned there were two points I wished to pursue in this blog. Let’s have a look at the second, and put it to work with the first point.

Since the sixties the great investment has been real estate. That sort of pattern will only work when a country is going through a particular phase. I go into great detail of how this works in my book on real estate:  https://www.amazon.co.uk/dp/B07D3ZW8D2

(For US readers please change .co.uk to .com)
Basically the great time to invest in real estate is when very few people own their own home, and when prices are cheap, and when borrowing facilities are easily available.

Over the course of the last few weeks I have been building up to a position that I think is not even just around the corner, but is upon us right now. That position is that I consider that we have come to the end of that golden period which started way back in the sixties.

Let’s have a look around.

In the sixties money was increasingly available to borrow to buy houses. Most people didn’t own their own homes, and home ownership was a working class dream. Houses were cheap. Borrowed money was available and interest rates were coming down, and the population was increasing, wages were rising, and economies in the developed world were booming.

Now look around at today’s landscape.

A large proportion of the population owns, or nearly owns their own home. Money is getting more expensive to borrow, the Western economies are stagnant or failing, governments are bust, and it is time to get out of credit. On top of all that, across most of Europe populations are shrinking, so there will gradually be less demand for houses. Real estate no longer has the bright future that it once had.

That conclusion takes me back to the main question I have been pondering for some months. Where do I invest now? Alternatively, where do I move to where real estate is at the beginning of a boom time?

I will try and answer at least one of those questions in a subsequent blog.

In the meantime, here is the next instalment of my clips from my books on Spain. This comes from the Book Travelling the Back Roads of Spain. Here’s the link: https://www.amazon.co.uk/dp/B0DH8JVTBP

Subscribe to our email alerts on the housing markets both in the UK and abroad.