"But how will I ever pay off my mortgage ? .."
I have a two and a half year old son. I would like to confirm at this stage that the terrible twos are very real and that he has fully embraced them ! Me and my wife often think of wonderful ways to entertain his growing mind and being outdoors in the impressively mild Yorkshire weather is always an easy win. Enter; painting the shed !
As a serving soldier, our current home is rented and is owned by the Armed Forces. Upon leaving, it must be reset to the way it was when you moved in and with an average posting of around 2-3 years, they can appear pretty unloved. Magnolia walls and 1960s flowery curtains greeted my horrified my wife (an interior designer herself) aswell as a shed that looked like it had a completed a few tours of Afghanistan.
One morning, thinking ahead, I suggested to my son that we could paint the shed any colour he wanted after he finished nursery; but only if he was well behaved. Parental bribery lesson #1. Purple was mentioned there and then, but quickly brushed over before the hustle and bustle of the morning routine kicked in, and off to terrorise some poor young women at nursery he went.
Later that day, while collecting him from nursery and saying my hellos, his response was simply "Purple daddy. Purple shed."
Now, of course the shed was subsequently painted bright purple to his absolute delight and it now stands proudly at the top of our garden overlooking the other pads like a Barney The Dinosaur tribute act. He has since asked for a white shed, but this was swiftly shut down. This did get me thinking however, and alongside my relatively recent mindset shift, raised some serious questions.
My son has no concept of colours being aligned to anything, he has no perception that blue is for boys / pink is for girls and no idea on the general consensus that purple is, as such, close to pink and a relatively feminine colour. While people find it hilarious that we have a bright purple shed, this notion just hasn't featured in his life experience to date which I find absolutely fantastic. I will continue to support these such ideals for as long as I possibly can as I feel that the innocence of youth should be protected at all costs.
For me, what this insignificant example does show us is the real power of learned behaviour and that you may well believe things to be true, simply because you were once told that it was the case. Consider all aspects of your life where this might apply ? It is scary really and a process I have undertook. Another way to describe these learned behaviours are as limiting beliefs, which is exactly what they do, limit you.
How does this relate to mine, and possibly your current property journey though ..
Above is my first place, bought with my wife on a residential mortgage using a deposit sourced from the Armed Forces Help To Buy scheme. The previous owner was an elderly lady with a taste for nicotine and a passion for closed windows. Renovation while living in-situ took a total of 3 years, moving room to room, before the purple shed enthusiast made his appearance and a swift square footage uplift was required.
Some profit was carried over to our next property, enabling us to purchase our "forever home". Fast-forward only 18 months however and there had been a few lockdowns, a posting 200 miles north for me and a redundancy for the wife. The "forever home" is now rented to a fantastic tenant and we live in a rental (albeit very cheap rental) in the picturesque city of Ripon. During this period I also added a joint-venture flat with a friend, on another residential mortgage.
It is only at this is the point, 6 years in, that I began to really research the property development industry. Something I had pretty much been oblivious to the entire time, despite my underlying feeling that I was smashing it. To be completely transparent, my thinking at the time was that with a couple promotions at work I would probably have the ability to add another property in five years and I would then only require a relatively stress free, low income job when my career in the army comes to an end to see out my working life. Winner ?
All the time I was wondering, how the hell do people get so rich through property ?? This is why we are here afterall..
The debt-free illusion.
We are all led to believe growing up that debt is bad. We are told that you should aim to find a well paid job, pay off your debts and retire mortgage free to see out your remaining years in relative bliss. How ridiculous. With a current retirement age of 66 and an average life expectancy of 78.7 years, that gives you 12.7 years of "bliss" to enjoy the fruits of your labour. That just isn't good enough for me.
This was however, the exact belief system that I grew up with and acted on until only last year ! I now see this limiting belief for what it is. It is the battered brown shed that my young son re-imagined without any exposure to these imaginary restrictions. I suspect many reading this will hold the same limiting beliefs as I did only last year.
I'd like to say at this stage that I am of course still early in my property journey and will not for one second pretend to have this at all mastered, but I have undertaken a period of research and invested financially in myself to learn from some highly successful mentors. The summation of this period has made me realise that I was blindly stumbling through life, conforming to these learned behaviours and without my own recognition that it was happening.
While it is certainly true that some debt is of course bad debt (high interest credit cards or unsustainable repayment plans, among others) this is not necessarily true within the world of property. Here, you have significant leverage, using assets, to fix large sums of money against and at very low interest rates. Put simply, banks are sat with more money than most people will ever have access to, and they will allow you to use this money for your own gain, for a very small fee.
There are many methods to tap into this resource, but one of which is through buy-to-let (BTL) mortgages. Aforementioned banks are willingly prepared to pay 75% (currently) towards almost any property that you so choose to buy to then rent out, with only a 25% commitment required of yours or another persons funding. The property will not only then be tenanted (paying you rent) it will rise with property market and double every 10 years on average, significantly reducing the debt to equity ratio in your favour. On top of all of this, Interest only BTL mortgages allow you to maximise this rental income and reinvest it to compound the profits into further properties. This ultimately produces a cash flow that can stand for as long as the property does, and I personally don't know of many houses that have fallen over.
I sit now with major clarity over where my future lies. I have ambitious short, medium and longterm goals that are entirely structured around the experiences and opportunities that I want to share with my family while I am still fully-fit and able to do so. Money does not form any part of my goal, however I aim to produce enough of it using the methods I now know of, in order to deliver the way of life that I desire.
It was admittedly a very difficult process for me, breaking away from my limiting beliefs that I had lived with for my entire adult life, especially the "Survive to be old + debt free = success" equation. A question I regularly struggled with was "But how will I ever pay off my mortgage ?" and it took a fair period of time and some wise-words from experienced developers to make me realise the true unrealised potential at all of our fingertips.
Personally, I now believe it is both unimportant and uneconomical to be mortgage free, at least until you have the means to comfortably do so, while having a truly fulfilling life in the process. You are only here once afterall.
Thankyou for reading, these are of course only my personal views and I would welcome any and all feedback.