I Sold My London Flat and Somehow Survived
Anton Kreil's second secret to financial success is about renting to own and defining assets and liabilities properly. It's one of those ideas that sounds fairly dry until I apply it to my own life, because in 2006 I did something that probably looks fucking ridiculous on a spreadsheet today.
I sold my flat in South London.
Then I left Britain.
Anyone familiar with what happened to London property prices after 2006 can now enjoy a quiet moment of financial pornography imagining what that flat might be worth today. I've done the calculation myself. Of course I have. I'm not going to pretend I've spent twenty years unaware that London property went through the roof while I was overseas drinking coffee and building a business.
The difference is that I don't regret it.
This is where I think Kreil's second secret gets interesting, because we're taught in Britain that owning property is almost automatically a good thing. You buy a house, the house is an asset, renting is throwing money away, property only goes up, get on the ladder as soon as possible. We've heard this stuff so many times that it's practically stamped onto the birth certificate.
I bought into it as well.
By my twenties I'd done what I was supposed to do. I had the flat, the job and the car. From the outside I was progressing through British adulthood like a contestant on some incredibly boring game show. Get the job, buy the property, pay the mortgage, upgrade things when possible, keep going until somebody gives you a pension and a carriage clock.
The problem was that my asset seemed to have developed an appetite.
The mortgage wanted feeding every month. There were bills, insurance, council tax, repairs and all the other little financial termites that come out of the woodwork once you own something. Then I had the cost of getting to work so I could earn the money required to pay for the place I wasn't in because I was at work.
It was a lovely little circle, and I was the hamster providing the electricity.
Now, none of this means the flat was a bad investment. That's too simplistic. The bloody thing would've made plenty of money if I'd kept it. But that's where defining an asset purely by whether its price goes up starts becoming less useful to me.
An asset exists inside a life.
That's the bit I care about.
If owning something ties up my money, creates costs, restricts where I can go and requires years of my time to maintain, I want to know what I'm getting back from it. The answer can still be plenty. Property can produce income, appreciate in value and provide somewhere to live. I'm not standing outside an estate agent throwing bricks through the window.
I'm just not religious about it.
Britain is a bit religious about property. We've managed to turn home ownership into a national fertility symbol. People don't just own houses, they discuss what they're worth at dinner. A bloke can spend twenty years complaining that he hasn't got any money while sitting inside something worth three quarters of a million quid.
He's property rich, which is apparently a special form of rich where you still can't afford lunch.
When I sold my flat, the money became mobile.
More importantly, I became mobile.
I left Britain at 28 and went overseas. Spain, Saudi Arabia, Japan, South Korea. I worked in the oil industry. I travelled, learned, made mistakes and earned money. Eventually I built a GIS company in Seoul.
And this is the bit that tends to disappear when somebody tells me how much money I would've made if I'd kept the London property.
Yes, I missed the profit on the flat.
Instead, I built a business worth millions of dollars.
I'm fairly comfortable with the exchange.
That's why looking backwards using only the value of the property makes no sense to me. It's like selling a fishing boat, opening a shipyard and then spending twenty years upset because the old boat went up in value.
The capital wasn't buried in the garden.
My life didn't stop when I sold the flat.
I took the freedom that came from leaving and built something else with it.
The GIS company became a far more important asset in my life than the flat ever was. Not because I can point at it and boast about what it's worth, but because of what it does.
It produces income, employs people, creates opportunities and gives me control over my time. It has also become worth millions of dollars in its own right.
More importantly, it's infrastructure.
It allows me to live where I want for much of the year. I can spend time in Vietnam, spend part of the year in Malaysia, return to Seoul when the business needs me and go back to Britain to see my family.
The flat couldn't do that.
The flat was bricks sitting in South London.
Very valuable bricks, as people occasionally enjoy reminding me.
But still bricks.
That's why I like the distinction Kreil makes around assets and liabilities. I don't think the useful question is simply whether I own something. I want to know what relationship I've got with the bloody thing.
Does it work for me, or am I working for it.
That question would've been useful when I was 28.
I had a job that paid for the flat, a flat that required the job and a commute connecting the two like some miserable financial umbilical cord. Everything looked respectable and nothing felt free.
Selling the flat broke the arrangement.
And yes, I rented afterwards.
I've rented in plenty of places over the years and I've never understood why that's supposed to be embarrassing. Somewhere along the line Britain decided that paying rent is throwing money away but paying mortgage interest, maintenance, insurance, legal fees, taxes and twenty grand for a new kitchen is an act of financial genius.
Apparently the important thing is that I own the kitchen at the end.
Fine.
I understand why people want to own their homes. There are good reasons for it. Stability matters to many people. Families put down roots. Some people love improving a house and staying somewhere for decades.
That's their life.
It wasn't mine.
I wanted movement.
For me, renting bought flexibility. If I wanted to move, I moved. If work took me somewhere else, I went. If I didn't like somewhere, I wasn't standing in the kitchen staring at a thirty year mortgage wondering whether Stockholm syndrome applies to buildings.
That flexibility had value.
It just didn't appear on a balance sheet.
This is one of the things I've become more interested in as I've got older. Some of the most valuable things in my life are difficult to put into a spreadsheet.
Time is one.
Mobility is another.
Control is another.
The ability to say no is worth a fucking fortune.
None of them appears on Rightmove.
The conventional calculation would compare what I sold the flat for in 2006 with what it might be worth now and tell me whether I won or lost.
I think that's the wrong calculation.
I'd have to compare the flat with everything that happened because I sold it. Twenty years overseas, the oil industry, the countries I've lived in, the people I've met, the business I built, the millions of dollars of value created in that business, the income it has produced and the freedom it still gives me.
Good luck getting that into an Excel cell.
That's why I don't look back at the flat and think I made a mistake. I look at it as something I owned for a period, then sold when it stopped fitting what I wanted to do.
It did its job.
Then I moved on.
I've never liked the idea that owning more things automatically means I'm becoming wealthier. Sometimes owning something is useful. Sometimes it becomes another mouth at the table waiting to be fed.
Cars are brilliant at this. You buy one and within about ten minutes it's demanding insurance, tax, fuel, servicing, tyres and some mysterious mechanical component you've never heard of that apparently costs £1,400.
Congratulations.
You own an asset.
The asset would like your debit card.
What I've tried to build instead is infrastructure that gives more back than it takes.
My company is the obvious example.
Investments are another.
Skills are another, although nobody puts those on the property ladder.
And perhaps the biggest asset I've accumulated since leaving Britain is the ability to structure my own life.
That was what I was buying when I sold the flat, although I didn't know it at the time.
I wasn't selling an asset and becoming poorer.
I was exchanging one kind of asset for another.
I swapped bricks for mobility, then used the mobility to build something worth millions.
Twenty years later, I'm sitting near the beach in Vietnam with a business in Seoul and no particular desire to spend my evening checking what my old flat might be worth.
I'm sure it's worth a fucking fortune.
Good for the flat.
I did all right as well.
I've got an email to answer and then I'm going for a coffee.