3.9 Property Investing 101: How Bricks & Mortar Build Wealth
A favourite of Brits and Americans alike, is it as safe as houses?
Missed last week? Read it here, or see the full escape map here
🏡 TL;DR - Property: Solid Asset or Sneaky Trap?
✅ Property can build wealth through capital growth and rental income, but it’s not passive - it requires time, capital, and effort.
✅ Your home isn’t an investment unless you plan to sell or downsize - you can’t live in it and sell 4% a year to fund retirement.
✅ Leverage can boost returns - but it also magnifies losses. A 10% drop in value can mean a 40% hit to your original capital.
✅ Stocks have historically outperformed UK property over the long term (10.3% vs 6.1% annually since 1980).
✅ REITs offer property exposure without the hassle - easy to buy/sell, diversified, and no stamp duty or repairs.
✅ Use property in your escape plan only if you’re comfortable with the trade-offs: cost, effort, risk, and tax. For many, equities or REITs offer a better balance of return and simplicity.
“You can’t go wrong with bricks and mortar”
“Safe as houses”
“Property always goes up!”
These were the phrases I heard growing up - repeated like financial gospel by my dad and the other grown-ups around him.
And it’s understandable. For one thing, it’s real. You can’t touch a stock certificate. You can’t repaint a bond. But you can walk into a house.
In 1995, the average UK home cost just over £50,000. By 2025, it was pushing £270,000.
That’s not just growth. That’s life-changing money.
A fivefold increase - visible, tangible, and sitting under your feet.
So, does property have a place in your escape plan? And if so, what role will it play?
Primary Residence vs Investment Property
Some count their primary house as part of their net worth. However its important to remember that your primary is something that you need to live in, to survive.
Unless you plan to sell it and downsize to something cheaper, it’s not something that you can sell 4% of every year. You can’t exactly sell a fraction of a house each year to fund your retirement.
And you can’t sell it at the click of a button, as you could index funds or bonds. Selling can take time, stress and money.
That’s why - tempting as it may be - we don’t include primary residences in the Asset Map.
However an investment property is not your home - it’s a tool.
It’s not something you rely on to live in, which makes it easier to treat it like what it is: a money-making asset.
The key question becomes:
How does it make you money?
And more importantly:
Does it help you escape?
Two Ways Property Pays You
Investment property has two main revenue streams:
Capital growth – the value of the property increases over time.
Rental income – monthly payments from tenants.
On the surface, it looks as simple as it gets: buy a place, watch it grow in value, collect rent.
But there's a catch.
Property - Back into the Work Trap?
The first hurdle is getting in.
You’ll need a substantial deposit - often hundreds of thousands of pounds just to get started.
If you have that kind of capital, great. But even then, it’s not as simple or frictionless as buying stocks, bonds, or even gold.
And once you own the property?
The real work begins.
Even with tenants in place, you're still on the hook for:
Mortgage payments
Tenant management (even if you outsource this to an agency, expect fees that eat into returns)
Repairs and maintenance
Insurance
Void periods, arrears, legal risks, taxes...
In short, property is not as passive as people think.
Yes, it can earn for you - but it can also tie you to a lot of effort.
The Tax Trap lurks
Just when you think you’ve won - the value of your property has soared, the tenants have paid down the mortgage - our old friend reappears.
The tax trap.
Because this isn’t your main residence, any gains you make when you sell will likely be subject to capital gains tax.
And that can be a nasty surprise.
Right when you thought you were home free - tax takes a bite out of your profits.
Should property play a role in your escape plan?
This isn’t to say property doesn’t work - it can be a viable tool in your escape plan.
But it’s not automatic. It takes capital, time, and effort. And depending on your stage of life, energy levels, or risk tolerance, that trade-off may or may not be worth it.
Some people enjoy the work of managing a property portfolio. So before diving in, ask yourself:
Do I want a passive income stream - or a part-time business disguised as an asset?
Safe As Houses?
Property has long been seen as a safe and reliable way to build wealth. But how has it really stacked up against equities over time?1
Data indexed to 100 from 1980. Source: Nationwide2, MSCI World, nominal returns.
The overperformance of global equities is notable.
Over this period,
UK Property has returned 6.1% per year on average.
Global Equities: 10.3%
Note: Individual regions (like London or parts of the South East) may have seen stronger property growth.
But nationally - across all regions - global stocks outperformed UK property over the long term.
Equities Outperform - Here's Why
Both property and stocks are influenced by interest rates - though in different ways, and to different degrees.
When interest rates fall, it becomes cheaper to borrow money.
For property, that means more people can afford mortgages. Demand rises, and so do prices.
For companies, lower rates reduce borrowing costs, which can boost profits, investment, and ultimately, share prices.
Consumers also borrow more easily - spending more, which helps businesses grow.
But here’s the difference - what happens when rates rise?
For both, money becomes harder to borrow, which will reduce demand for housing - and affect the price negatively.
The same is true for equities. However remember equities represent real businesses, run by real people. They adapt to difficult circumstances. They can
cut costs
develop different product lines
move into new business areas
Businesses are quasi-organisms, living, breathing, constantly changing.
Property on the other hand, sits there passively. It can’t adjust to market conditions or make strategic decisions. It waits for the economic tide to turn in its favour.
Get a leg up with Leverage
There is however, one way magnify your returns from property:
Leverage. Borrowing.
Let’s say you buy a house for £100,000, and you only put down £25,000 of your own money.
The bank lends you the other £75,000 with a mortgage.
The house goes up in value by 10% - it’s now worth £110,000.
You sell it, pay back the bank’s £75,000, and you’re left with:
£110,000 - £75,000 = £35,000
You started with £25,000 and now you have £35,000.
That’s a £10,000 profit - or a 40% return on your original £25,000.
That’s the magic of leverage.
You only put in part of the money, but benefit from all of the growth.
That is why stocks have outperformed property. They leverage - borrow money, grown their profits and magnify their returns.
The Leverage Trap
But just when you think you’ve found a shortcut out of the money trap…
It sharpens another weapon to snare you again.
What if the property drops by 10% instead?
It’s now worth £90,000.
You sell, repay the £75,000 loan - and you’re left with just £15,000.
You’re down £10,000 - a 40% loss.
That’s the flip side of leverage.
It can supercharge your gains - and amplify your losses just as quickly.
Leverage isn’t inherently bad.
But it demands respect and awareness.
You’re not just investing with your own money -
You’re investing with someone else’s, and they always get paid first.
Concentration Risk
Remember the only free lunch in investing? Diversification - you spread your risk across many assets, and still benefit from the return.
Buying a single property in a single location is the opposite - it’s concentration risk. You’ve put all your eggs in a single basket in a single area of a single country.
Your bet might work out great - that areas’ property prices may boom. But it may not.
That’s the risk you take with property. You may want to have a portfolio of properties in different areas.
Where to Buy Property
Physical Property – Bricks, Mortar, and Commitment
Buying an actual property (a flat, house, or rental unit) gives you direct ownership - but comes with high entry costs, legal complexity, and long-term commitment.
How to buy:
Estate agents & listing sites:
UK: Rightmove, Zoopla, OnTheMarket (UK), or local agents.
US: Zillo, Realtor.com etc, or local agents
Auctions: For experienced buyers or below-market opportunities - but risky if you're unprepared.
New builds / off-plan: Direct from developers - often with incentives, but do your homework.
Upfront costs include:
Deposit (usually 5–25%)
Legal fees
Stamp duty (UK) (can be thousands)
Surveys & valuations
Mortgage setup fees
⚠️ Note: Property is illiquid, expensive to maintain, and slow to buy/sell - but it can generate rental income and capital growth if chosen well.
REITs – Property Investing Without the Hassle
Want property exposure without buying a whole house? That’s where REITs (Real Estate Investment Trusts) come in.
Think of them as index funds for property. You can also buy index funds which track property indexes.
REITs are companies that own or finance income-producing real estate — like shopping centres, offices, apartments, and warehouses. You buy a share of the REIT, and it pays you rental income (dividends) and offers growth potential.
And by having a share in multiple properties in multiple areas, you will be more diversified, and avoid concentration risk.
How to buy:
Through your investing platform (same as stocks/index funds)
Search for REITs or REIT-focused ETFs
Why REITs?
Low barrier to entry (you can start with less than £100)
Easy to buy/sell (high liquidity)
Diversification - most REITs hold multiple properties
No stamp duty, no maintenance headaches
⚠️ Note: REIT prices can swing like stocks, especially in times of market stress or interest rate hikes. But they remain a great way to add property exposure to your portfolio.
Recap
1️⃣ Dual Income Streams
Property earns through capital growth (rising house prices) and rental income — making it both a growth and income asset.
2️⃣ Effort and Entry Costs
It's not passive. Buying property takes significant capital, and managing tenants, maintenance, and void periods can be time-consuming (or costly if outsourced).
3️⃣ Leverage Cuts Both Ways
You can magnify gains by using a mortgage — but it also increases risk. A small drop in value can hit you hard if you're heavily leveraged.
4️⃣ Less Liquid, Less Diversified
Property is slow to buy/sell, comes with high transaction costs, and often concentrates your wealth in a single asset/location — increasing your risk.
Up Next: Gold Investing: Your Guide to the Ancient Hedge
https://curvo.eu/backtest/en/market-index/msci-world?currency=eur
https://www.nationwidehousepriceindex.co.uk/resources/f/uk-data-series
Disclaimer: This content is for informational and educational purposes only. It does not constitute personal financial advice. Everyone’s situation is different — if in doubt, speak to a qualified, regulated financial adviser.
Great content! I believe in diversification so while I do invest in the financial markets I also own rental properties. I just need to keep in mind not to overexpose myself in either direction and keep my debt to equity ratio at a reasonable level.