The Property Podcast TPP018: Leverage Explained
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Jul 18, 2013 Explore the intriguing world of leverage in property investing. Discover how using mortgage debt can amplify your returns, and understand the difference between good debt and bad debt. The hosts reveal a fascinating comparison of cash purchases versus leveraging multiple properties. They discuss the potential risks of over-leverage and the importance of investor comfort and stress testing. Plus, a study shows young people prioritizing homeownership over other goals, highlighting the shifting value of property in today's society.
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Weather Can Move Sale Prices
- External factors like weather can influence buyer behaviour and sale prices, with sunshine boosting sales values.
- Rob Bence references a study linking warmer sunnier days to higher sales prices and buyer activity.
Homeownership Still Core For Young People
- Homeownership remains a primary aspiration for young people despite rising renting trends, according to a BBC poll.
- Rob Dix suggests first-time buyer policies may rekindle ownership as circumstances change.
How Leverage Amplifies Returns
- Using mortgage leverage multiplies returns when property prices rise because you control more assets with the same capital.
- Rob Bence's four-property example shows a £100k capital turning into a £100k paper gain after a 25% rise, a 100% ROI.