I once used to follow the writings of an American investor who was quite interested in real estate. He had a little saying which he was very fond of. ‘Your home is your nest, not your nest egg.’
Unfortunately most people seem to think real estate is a nest egg. However, there are indeed several ways of looking at real estate,.
Most people are simply interested in ‘getting on the property ladder’. Do remember that what most people think is usually garbage. Getting on the property ladder is one way of strangling a young person with a lifetime of debt. Debt destroys you if you dont follow the basic rules of rich people. Borrow to make money, not to lose money.
You dont borrow to consume, and you only borrow to make a profit. Investing in a mortgage is a very silly way of investing. To understand all the ins and outs of that statement you’d need to read my books on real estate and money. I’ll put a reference to each of those books at the bottom of the notes.
If you want to buy a house to live in, do the long term maths.
My advice to anyone wanting to own their own home is to buy a house on a mortgage and dont live in it. Use the rent to pay off the mortgage. That takes care of rule number two the rich people understand.
“Get other people to pay your debts.’
In my book Being Rich is Easy, I give a current example of how much it costs you to buy your home with a mortgage, and how much it costs when you get someone else to pay for it. And these examples are from 2025.
But this blog is not about turning your nest into a nest egg. This is more about investment per se.
Let’s assume you check out the financial pages of your preferred daily rag. Not the best way to research an investment, but if you find a company that is making a profit, is likely to corner the market in the future and make even more profits, then you may decide to invest.
Buying a house is in many ways a similar investment operation.
I am currently trying to decide where to live. One of the decisions I have to make is whether to buy my next home or rent. That means I am concerned to use my home as an investment as well as a nest egg.
Let’s start by looking at real estate as an investment, then transfer our attentions to foreign purchases.
If I am twenty-five and looking to buy my first house, my usual first option would be to buy using a mortgage, then tieing up a serious chunk of my future income which is going to seriously hamper my efforts to make money in the future. In my book I give an example of buying a cheap property for about £90,000, which, if you bought for cash would cost just that. If you buy with a mortgage it will probably cost north of £300,000. That’s just plain stupid.
If you bought your first property and rented it out, you have an open ended situation. A single mortgage is a closed financial operation. I cant go into all the maths here as I dont have the space, you’d need to read the books. But that first purchase complies with one of the main principles of wealth. It means you are obtaining a useful asset while someone else is paying for it.
After a while you can re-mortgage that first asset to start purchasing a second property, which you could re-organise in such a way that you get someone else to pay for that as well. The book doesn’t cost much to buy and it will make you tens of thousands of whatever currency you usually use.
But what I wish to discuss in this, and maybe a subsequent blog, is how you think things through when are wondering about buying abroad.
The first things to note is that if you are buying real estate in, for example, Spain, then you are really investing in Spain. Is Spain, as a company, a company worth investing in?
The general view is that it is not.
Never mind the price of a house or apartment. What about the country?
The debt to GDP ratio is into danger territory. That means the country is borrowing money to lose money. That is insane. Any company doing that would be heading for bankruptcy. It is not advisable to invest in such a country.
What is the current commercial status of the country? Is it, as a country, making a profit? If a company isn’t making a profit, only an idiot would invest in it. If a country isn’t making a profit surely only an idiot would invest in it. Is Spain making a profit? Or, substitute your preferred country for Spain. Is that country making a profit? If not, dont buy a house there.
What’s the future look like? After all, buying a house is generally a long term decision. Look at youth unemployment. If its high or rising, dont invest,
Now start to look at things from the opposite position. What countries are operating like successful go-ahead companies. Find out a few figures and then stack those figures against the country you were considering investing in. Does that deal now look as good as you initially thought?
Next week I will choose a basic set of metrics to judge whether a country is a good place to put your money. I will set those metrics against a set of other countries where the metrics show a totally different conclusion. You may be surprised.
Notes: Here are the links to the two books I mentioned above. I give the Amazon links for the UK and the US.
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