Protecting £120K from my house sale - buy a property fund?

MickeyEllis

When I split up with my ex I sold my house and have £120k left. Due to personal circumstances I'm not ready to buy another house at the moment (though I hope I will in 1-2 year's time) - but with property prices rising quickly now if I leave it in a savings account it loses value (relative to the property market that I want to track). So can I get some opinions please...
1) is it a good idea to invest the money in a few separate property funds so it at least tracks property values?
2) any suggestions for how to choose a property fund - what makes a good one (buy/sell price difference, other costs etc.)?
3) is there anything other (property-related) than a property investment fund that I should consider?
Many thanks.

Linton

Property funds generally invest in commercial property which behaves differently to residential property. There are a few residential property trackers around - try googling "residential property tracker". Whether they are any good and how easy it is to invest in them I have no idea.

MickeyEllis

Thanks Linton. I'll Google that.
Anyone got tips on how to choose a fund? What to avoid?

Bantex_2

If you are looking for 10% short term returns with no risk, you are going to be disappointed.

MickeyEllis

My aim is to track the residential property market to protect my house money until I'm ready to buy again. So I wouldn't mind my money falling in value as long as that's what the property market also did.

xylophone

http://www.theguardian.com/money/2014/feb/22/housa-invest-residential-property-market-fund-halifax


If you type Reit into Google you should be able to pick up an FT article "The Reit Answer to Property Investment"

http://www.bpf.org.uk/en/reita/reits/uk_reit_list.php

Discussion above might be of interest.

brendon

MickeyEllis wrote: »

but with property prices rising quickly now if I leave it in a savings account it loses value (relative to the property market that I want to track)

It's exactly for this opinion that bubbles form.

fwor

Quote: Other financial advisers are less sure. Mark Dampier, investment director of Hargreaves Lansdown, says: "The thing anybody investing in property has to think about is liquidity. If the property market falls, and you want your money back, then that's when you find the investment may be totally illiquid."

This was something I found with my (thankfully small) investment in a commercial property fund. For two years ('09-'10), prices dropped so much that withdrawals from the fund were suspended. It's quite possible that something similar could be applied to residential property funds when the next residential property price crash happens.

mike88

You are taking a huge risk by investing in anything but cash given your very short term investing horizon. If your intention is to track residential property prices for 1-2 years you would be far better off buying a property now rather than run the risk of a fund which will undoubtedly levy up front charges and annual charges meaning that you will probably end up losing out in the end.

It is true that property prices are rising and may well do so dramatically over the next few months when the pension budget changes will inject cash into the housing market.

If you are sensible you should anticipate this bubble and buy now.

ColdIron

fwor wrote: »

This was something I found with my (thankfully small) investment in a commercial property fund. For two years ('09-'10), prices dropped so much that withdrawals from the fund were suspended

Not Glanmore by any chance? A friend of mine put a considerable sum into it, the results were not pretty

http://www.trustnetoffshore.com/Factsheets/Factsheet.aspx?fundCode=GGF95&univ=DC

Freecall

mike88 wrote: »

If your intention is to track residential property prices for 1-2 years you would be far better off buying a property now

SDLT and other costs (insurance etc) make very short term investment in property impractical.

I think that the OP has the right approach.