The £100K Mistake:
Why Buying Property in Cash Is Financially Illiterate.
Every so often, someone wanders into the property space with sweeping statements like, “If you need bank debt, you shouldn’t be investing.”
Often, it’s a financial advisor. Sometimes, it’s someone with a trauma story from 2008. In this particular case, it was a sleep therapist named Alan, who apparently moonlights as an economist.
His view? If you don’t have the full cash to buy the property outright, you shouldn’t be playing the game.
That sounds safe. Conservative. Responsible, even. But when you break it down — not emotionally, but mathematically — you realise just how deeply flawed that advice is.
Let me show you.
The Cash Buyer Illusion
Let’s say you have £100,000 to invest in property. You decide to take Alan’s advice and purchase a single property in cash for the full amount.
It rents for £10,000 per year, giving you a neat 10% yield.
No mortgage, no stress, no leverage. Just clean, slow growth.
Ten years pass. The property doubles in value, fairly reasonable if you’re in the right location and can ride the average UK growth curve. Your £100k asset is now worth £200k. You’ve also collected £100k in rent (ignoring inflation and expenses for simplicity).
Total gain: £200,000.
You’ve effectively doubled your money over a decade. That sounds fine… until you realise what you've left on the table.
The Leverage Advantage
Now let’s look at what happens if you take the same £100k and apply strategic leverage.
Instead of buying one property outright, you split the capital into four £25k deposits and secure 75% mortgages on each. Now you own four properties, each worth £100k, controlling a £400k portfolio with just your £100k invested.
Each unit still rents for £10,000 per year — but this time, you’re paying £5,000 in mortgage interest per property. That gives you £5,000 net cashflow per unit, or £20,000 per year total.
Already, your cashflow return is 20%, double that of the debt-free model. But we’re not done.
The Long-Term Growth Picture
Fast forward ten years. Each £100k property has doubled to £200k.
The unleveraged investor now owns one property worth £200k.
The leveraged investor owns four properties worth £800k in total.
Let’s break down the equity picture:
You still owe £75k per property, or £300k in total.
But the market value is now £800k.
That means you’ve grown your equity position from £100k to £500k a £400,000 gain. That’s four times the capital growth of the cash-only investor.
And all of this assumes you never re-leverage, never refinance, never reinvest rental profits, just hold and wait.
Inflation: The Unseen Ally
Here’s what Alan and the cash-is-king crowd don’t understand:
Inflation punishes cash and rewards debt.
Your £300,000 mortgage doesn’t grow with inflation. But rents and property values do. Over time, your debt gets smaller in real terms, while your income and asset values rise.
In a high-inflation environment — like we’ve seen across 2022–2024 — that difference becomes even more pronounced. You're essentially paying off fixed debt with inflated pounds, while enjoying rental increases that track real-world costs.
This is how banks, institutions, and seasoned investors stay ahead.
It’s how wealth is transferred, not by avoiding debt, but by understanding how to use it intelligently.
The Cost of Playing Safe
Let’s recap the two scenarios over ten years:
Strategy Rent Collected Capital Gain Total Return
Cash Buyer £100,000 £100,000 £200,000
Leveraged £200,000 £400,000 £600,000
Same starting capital. Same properties. Same market.
£400,000 difference in outcome, purely from using leverage.
So let’s be clear: buying in cash is not “safe.”
It’s lazy capital allocation. It’s financial underperformance masked as caution.
It’s the kind of advice that might help you sleep at night… but it’ll cost you dearly in the morning.
What the Gurus and the Government Won’t Say
There’s a broader conversation here.
The system wants you to fear debt. They don’t teach strategic leverage in schools, and they certainly don’t encourage it in mainstream financial planning.
Why?
Because the system isn’t designed to produce investors. It’s designed to produce savers, predictable, risk-averse, inflation-eroded savers who will be sold financial products their entire life.
Debt, when used correctly, isn’t a burden. It’s the engine that drives real asset accumulation.
The problem isn’t leverage. It’s ignorance.
Final Thought: Choose the Right Game
This isn’t just about numbers. It’s about choosing a different financial model, one where you use bank money to control appreciating assets, grow cashflow, and build wealth that isn’t eroded by inflation or taxed by inaction.
You don’t need to be reckless to use leverage.
You just need to be educated, precise, and strategic.
That’s the world we operate in.
That’s the playbook I follow.
And it’s why (while Alan the sleep therapist is waiting for his pension) we’re building real wealth from real assets.
If you’re ready to stop playing small, and start using capital the way professionals do, I’ve got the frameworks and case studies to help you do it properly.
— Rob