£100,000 to 'invest' but where?

AnnoyedofLancs

In a nutshell- an elderly relative has £100,000 that they want to move from their bank where they've been getting 3.2%, back to their building society ; they want Instant Access to the money. The move is being 'driven' by my sister, who is of the opinion that " they'll get a better rate at a building society".

To me this doesn't make sense, they're putting all their eggs back in the same basket they took them out of during the big banking panic!!!

I on the other hand, have seen a 4 bed property that they could probably get for £165,000 (they have access to the £65k). I reckon it only needs £5K max spending on it (plus legal costs etc). I would manage the project. A similar style, but substantially smaller 3 bed property opposite, is for sale at £215k. It's in a desirable area.

My argument is, spend £170k bang it straight to market at £220k+ Even if it sits there for a year, they're not going to lose and potentially gain so much more.I really think this house is a fantastic buy.

My relative is elderly, and although compus mentis, they don't relish the thought of all the nonsense you have to go through to open a bank account. I think they should either spread their money around or go down the house buy route.

Am I looking at this too simply? Any pointers would be very much appreciated.

dunstonh

I on the other hand, have seen a 4 bed property that they could probably get for £165,000 (they have access to the £65k). I reckon it only needs £5K max spending on it (plus legal costs etc). I would manage the project. A similar style, but substantially smaller 3 bed property opposite, is for sale at £215k. It's in a desirable area.

That fails to meet their objective of wanting instant access to the money.

My relative is elderly, and although compus mentis, they don't relish the thought of all the nonsense you have to go through to open a bank account. I think they should either spread their money around or go down the house buy route.

If they cant face the hassle of opening an account then property is going to be worse. Especially given the complicated ownership and arrangements that would need to be put in place as well as the risks involved.

AnnoyedofLancs

I think the Instant Access bit is a red herring. They have at least 140k elsewhere and do not need instant access, I think this is my sister sticking her ore in.

Why do you say complicated ownership? It would be my relatives purchase and house buying isn't complicated, the legal process is simple.

The problem is...when it comes to buying & selling houses, I'm experienced and have 'worked in the industry' for my sins. My older sister on the other hand is naive, by her own admission, when it comes to investing money.

joerugby

I'm not sure now is the best time for property speculation. The market could be on its way down.

missile

So your elderly relative has circa £240,000.

Buying property is not guaranteed to yield a profit. If that property is such a great investment, how come it is up for sale and no one else has snapped it up.

I would suggest your relative has enough to live comfortably and there is no need to expose the capital to any risk. Put it in the highest saving accounts you can find.

thepurplegoldfish

Personally I'd speak to my bank manager or someone with a background in finance. If your relative can't be bother with the in's and outs of opening a bank account (Which is very simple), can they really be bothered with buying a house and doing it up, for all you say you'll manage it. Also with buying a house there is no access to the cash tied up in it.

On a totally personal note i'd give advice but not push or get to involved, money is an evil thing when it comes the friends and families, how would you feel if the house turns out to be a bad investment, either through market fall, subsidence, other faults. Similar story with the banks what if one folds...

If it were my money with my limited knowledge, i'd spilt the cash between a few different banks, just in case one folds, the government covers you for upto (i think £35K or £50K) per institution.

Hope this helps

Ian_W

I share your pain!

I, too, love speculating with other folks money.

Perhaps we lost our ways, we should have been INVESTMENT BANKERS.

edinburgher

I would suggest your relative has enough to live comfortably and there is no need to expose the capital to any risk. Put it in the highest saving accounts you can find.

Spot on - the only 'work' you should be doing with this money is moving it between cash accounts to minimise the effects of inflation and to make sure that you're covered by the deposit guarantee in the event of a bank folding.

I, too, love speculating with other folks money.

This made me laugh - it does seem that the OP and his sister are a bit like the two old gents in 'My fair Lady' who enjoy a wager

macman

OP, if they buy that house at 170K and sell it for 220K, they will pay 18% CGT on it, unless you are proposing that they sell their existing property and live in the new one while you renovate it?
They should not have more than £50K under any one banking licence, so spread the £100K accordingly across 2 accounts with different banking groups. £100K in one account is insane, as £50K of that is not covered by gov't guarantee.
I'm puzzled as to why they think they need instant access to all £100K though-surely say even a quarter of that in an instant access account would cover even the direst emergency?
Most national building societies are now demutualised (Nationwide being an exception) so they are effectively banks. Use the institution that pays the best rate regardless of whether it calls itself a bank or building society.

shortchanged_2

I have to wonder why they want instant access to such a large amount of money, is your sister planning on fleecing your elderly relative?

I agree with joerugby in that I think the housing market is still on the way down so not convinced now is a great time to buy.

I would just say either leave the money where it is as that isn't too bad a rate in the current climate or shop around for a better rate. I assume your elderly relative isn't much of a financial gambler.

chewmylegoff

if there really was a property that you could (with certainty) buy for £165k, spend £5k on and then sell for £200k+, then a professional property developer would have bought it by now. why attempt to expose an elderly relative to risk?

no doubt you'll be taking a fee for your "management" of the project - so you make a guaranteed sum and your elderly relative takes all the risk.

My relative is elderly, and although compus mentis, they don't relish the thought of all the nonsense you have to go through to open a bank account.

if this is true they're hardly going to relish the thought of all the nonsense you have to go through to buy and house, all the nonsense you have to go through to sell it again - slightly more onerous than opening a bank account!