Try an experiment: type “debt” into an image search and see if you can tell whether the sentiment is mostly negative or positive. It will come as no surprise that the overwhelming majority of the images will have negative connotations. This shows how deeply ingrained these sorts of beliefs are in most people.

[The usual caveats apply; we are not financial advisors. This is an opinion piece only.]

But debt can be an incredibly lucrative thing to control, making you far more money in the long run than savings from your employment. And it can also save you that most valuable of commodities – time.

The Good. In our opinion (quelle surprise) it’s debt secured against assets – that is, things which make money. In mainstream Property Investment where most people start out, the leverage effect lets you control approximately 4 times more assets than you otherwise would have done. Meaning you get 4 times the rental income and 4 times the capital appreciation – all other things being equal. To hammer this home, imagine you had £100,000 to invest for a 5 year period. You could either buy 1 £100,000 property cash – making 5 years worth of rent and say £25,000 in capital appreciation – OR – you could buy 4 properties for the same amount of cash using a 25% deposit and the banks money – and make 4 lots of 5 years’ rent (i.e. 20 years of rent) in the same time, plus 4 lots of capital appreciation (£25,000 x 4 = £100,000) in the same 5 year period. In scenario (a) Cash purchase, you’d make £25,000 capital appreciation plus 5 years’ worth of rent. In scenario (b) Mortgaged purchase, you’d make £100,000 capital appreciation plus 20 years’ worth of rent. Sure, you’d have to pay interest on the loans, but this is more than covered by the rent. Conclusion: buying with the bank’s money makes you more than 4 times more money over the same period. You have the additional advantage that your eggs aren’t all in one basket too. As you can imagine, taking on debt secured against property in this way can quickly lead to a (positive) snowball effect over time.

The Bad. In our opinion, in purely monetary terms this is debt secured against a liability – something that loses money with time. This could be for example a car. Of course, this may be worth it to you if you really want that car and the loss of money makes sense.

The Ugly. In our opinion, this is unsecured debt – particularly unsecured debt where there is a high interest rate to pay. And the rates do often go higher as the lender is taking on more risk. It’ll come as no surprise that we think the worst culprits for this are credit cards. However, as with everything, they may have their uses – so long as you are going in with your eyes wide open.

Married2Property Partners are a property company that aims to create social good through property.

These articles are written by Darren de Wal based on his 12 years of experience as an active Property Investor, and 16 years getting to a senior leadership position as an Officer in the Royal Air Force. They are for the benefit of those with a general interest in Property, as well as those wishing to start out investing themselves.