‘Paying off your mortgage is stupid’: 28-year-old with 15 properties divides with advice
A man that owns 15 properties has given some wild advice online and Aussies are divided with some calling it “stupid” and others praising it.
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Jack Henderson has amassed a $40 million dollar property empire but he still rents because he doesn’t believe in owning your primary property.
Mr Henderson, 28, runs a property advisory firm. He bought his first home at 18 and has since secured over 15 investment properties.
He rents a $15 million Sydney mansion because he wants a good lifestyle while working towards a rich future.
The 28-year-old lives and breathes real estate, and he claims that Australia’s obsession with paying off mortgages before you do anything else is straight-up “stupid” and doesn’t make any sense if you’re trying to amass wealth.
“Most people that want to build wealth want freedom and buying a home and then paying it off for 30 years doesn’t mean you have freedom,” he told news.com.au.
“When people pay off their homes, they don’t sell it because they want a home. If you pay off your investment property, you have an income.”
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Mr Henderson said that his own parents are a prime example. They worked hard all their lives, bought a home, paid it off when they were in their 60s, and then had to sell it and downsize to use the money to continue living a nice lifestyle.
The 28-year-old argued that selling your family home once you’ve finally paid off the mortgage isn’t success or freedom and that the Aussie dream of being mortgage-free is flawed.
“It is a belief system because we’re taught debt is bad. People think debt is bad and the first thing they want to do is pay their mortgage down to zero,” he said.
“You pay the ATO, then you pay your mortgage, and then you live with whatever is left over, and that is why most people are broke.”
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Mr Henderson has taken a different approach. He rents his $15 million mansion, pays the $4,000 weekly rent, and believes that is a better deal because if he bought it, he’d be paying easily over $10,000 in mortgage repayments.
Meanwhile, he owns several homes in Sydney and Newcastle and even a farm that is used for special occasions like weddings. Those properties generate income and increase in value, and he can sell whenever he needs the cash flow.
He isn’t being tied down to one mortgage that he is desperately trying to get ahead of. Instead he has created an empire.
“You can rent a home and have none of the expenses and none of the maintenance costs and then use the money you’ve saved to invest,” he said.
Mr Henderson said the good thing about renting is that if times are good, you can spend less. If times are bad, you can move rentals; you’re not tied to a property.
The 28-year-old said that it gives him the “financial freedom” he needs to comfortably invest in other areas.
The property expert took this theory to Facebook, claiming that “paying off your mortgage is stupid” and explaining that he’d rather invest than spend the bulk of his income servicing one mortgage.
“If I know that debt naturally becomes less relevant over time due to inflation and property growth. Why would I rush to pay it off? I’d rather reinvest my money into more properties.”
Mr Henderson advised that people should use the equity in their mortgages to buy investment properties because the “more assets you hold, the more exposure you have to long-term property growth” and claimed debt isn’t something people should fear.
“If you shift your perspective, you’ll realise that debt is a tool that can accelerate your wealth if used correctly,” he said.
Mr Henderson’s advice was quick to divide. While some people agreed that investment properties are the best way to amass wealth, others thought his advice wasn’t suitable for most people.
“No one thinks paying off your mortgage is stupid,” one argued.
Someone else said people should “run in the opposite direction” before listening to him.
Someone else said it was good advice until you can’t afford the interest, and the “bank takes it all back,” leaving you with nothing.
“This is scary stupid. Doesn’t at any point mention the risks of carrying debt or the freedom of having a paid off home,” one wrote.
Another argued that the Mr Henderson’s advice made perfect sense because tenants will pay the mortgage for you.
Originally published as ‘Paying off your mortgage is stupid’: 28-year-old with 15 properties divides with advice
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