Like I say you got into the right asset class at the right time. Can I borrow your crystal ball ? The one that told you interest rates would be next to zero for 10 years and house prices would go like a rocket.
I am useless at predictions, especially if it involves the future !
Actually it was an article I read in The Economist in or around 2010.
At the time I was mortgage free in a flat worth ~£200,000; £165,000 in savings (Scottish Widows OEIC); and a third share in two flats in the extreme south of China bought for ~£15,000 and ~£18,000 (my share not the flats).
The article’s message was that recovery from the financial crisis would be long and slow, and that those who could borrow should borrow and savings spent.
I mortgaged my flat for £120,000 and bought our house for £348,000 with the £120,000 deposit and a £228,000 mortgage.
I was now a borrower with £348,000 of debt, all paid with the rental income from my flat.
My savings were intact and also my third share of the two Chinese flats.
In 2011, after a row with my boss, I left my job with a payout I am not at liberty to reveal, but paid the deposit for my second flat. (Savings and Chinese flats still intact).
We sold the flats in China which had risen in value threefold while the value of the Yuan strengthened against the pound by 50%, meaning my investment had nearly quintupled.
We bought another two flats (in the same block), one paying cash! Our flats in China gone, savings depleted but not entirely gone.
Our fifth flat is Clare’s, where she lived before I bought our house. And mortgaged at a poor rate. The last of my savings went to pay off her mortgage.
I’d transformed myself from being debt free with £165,000 in saving to having £744,000 of debt (February 2014), just as the article in The Economist suggest I do.
Still no job, one baby and another on the way. But rental income was more than I had been earning.
Was it luck? I’ll call it “informed luck”.
It was “informed luck” that led me to invest in the two Chinese flats: my brother said to me, “If you had the opportunity to invest in seafront property in Hawaii in the 1950s you’d be made for life”. Sanya is the Hawaii of China (but full of Russians).
It was “Informed luck” that led me to plunge my building society savings into a Scottish Widows OEIC in March 2003, the day after the FTSE 100 had fallen for ten consecutive days and the eve of the Second Oil War (Iraq War). Another Economist article had informed me that it was uncertainty over war that was causing markets to be depressed. Once war began the uncertainty would be over and markets recover.
