Ah so I show up at the bank and tell them “Please give me 40 million so I can buy apartments and rent them out - oh and I also have no money or safety of my own so just hope that I will be able to pay it back”
Good luck with that at a German bank.
Good luck with that at a German bank.
The mortgage is likely interest only so the landlord can make approximately £10k/year from rent from that one property. The next year they buy another, their earnings are now £120k. It now only takes them a few months to save another £50k to buy their next property, and the more properties they own the faster it is to acquire the next one. After a few years of this let's say they have 10 properties in total. They are now earning £200k, which makes the bank's decision to lend them more money an easier one, even though they have £1.5m in mortgage debt already.
If they already have 10 properties then it's not that much of a relative leap to get to 20, then 30. With 30 properties they're earning £400k a year and can finance a new property every 2 months. They do have £4.5m in mortgage debt that is not being paid off though, but they're making a bet on the value of those properties exceeding the purchase price by the time the balance of the mortgages becomes due 20 years from now. In the past that was a pretty safe bet.
The risk of doing all of this is that the property market can slow down, rates can go up, values can fall, property maintenance can become a significant cost, bad tenants can ruin a property and wipe out several years earnings and the government can change tax rules that makes all of this far less profitable (as happened in the UK quite recently). But it's absolutely not impossible.
About a decade ago I worked with a perfectly normal guy in his mid 50s who worked as an accountant in a small software company, he had 200 BTL mortgages! He just kept reinvesting the profits and buying more each month.