"I've got a friend in London with a normal job who just bought a few flats for like £90k mortgage, £10k down and the equity in them is now well over £1m. No other regular investment performs like that with little risk."
From the numbers you quoted, I assume (s)he got started in 1999/2000? It seemed less risky then, because:
1) Rental income on a 100k flat (~10k/year) would easily cover the interest cost (5-7k/year, depending on the mortgage deal).
2) Although prices were already higher than historical prices, there was no sign that they were becoming unaffordable. Many people in London earned >=30k or had joint income of >=36k, so they could easily get a 90k mortgage.
3) Management fees on flats were low (less than 10% of the monthly rent).
Only (1) is still true today, but could reverse if interest rates go up a little.
Today's buyers do not face the same environment your friend did.
I agree with that. I simplified a bit, I think the most recent purchase was around 2007 for ~300 and would be wary of piling in today in London. If the area you are in is reasonably priced and going up though the strategy will still quite likely work.
From the numbers you quoted, I assume (s)he got started in 1999/2000? It seemed less risky then, because:
1) Rental income on a 100k flat (~10k/year) would easily cover the interest cost (5-7k/year, depending on the mortgage deal).
2) Although prices were already higher than historical prices, there was no sign that they were becoming unaffordable. Many people in London earned >=30k or had joint income of >=36k, so they could easily get a 90k mortgage.
3) Management fees on flats were low (less than 10% of the monthly rent).
Only (1) is still true today, but could reverse if interest rates go up a little.
Today's buyers do not face the same environment your friend did.