How to invest approx. 65K

chrisalan

We are 65 and 69. Neither paying income tax. We have received the above from an inheritance. We rent our cottage and do not wish to buy to live in. We need at least another £300 per month to live on. We have considered buy to let. We thought of using all the money on one property to receive the rent from it but have been speaking to a company who is advising us that we could put deposits of £16K on each of 2 or 3 properties, take out mortgages on them and receive the rents on all of them. They are special builds in the north of the country whereby they are new, fully furnished for the money you pay and are already tenanted. The net percentage back for each property would be approx. 8% pa on each property. This seems a good return to us and we wouldn't have to worry of the rental side of it, they do it all. We realise we need to speak to a Financial Advisor, but feel it needs to be one that is particularly knowledgeable with this type of investment, not sure how to find this person. Or has anyone got any other advice please?

Steve_xx

Gosh, this seems like heavy going. One of you is age 69 and you plan to have several mortgages it seems. Also you don't mention how the capital will be paid back and when? Also the maintenance of the proposed properties hasn't been mentioned. It's difficult to see, by what you say, where there would be any income from the venture. Maybe you can elaborate further.

fwor

The BTL deal you mention may seem attractive at first glance, but how realistic is it in terms of bad tenants and maintenance costs, for example? I would imagine with that sort of arrangement, one bad tenant could utterly screw up the equation for a while.

I personally would be looking at something a lot simpler - more conventional investments with lower returns should make that much last quite a while if you really do only need £300/month...

Eco_Miser

Did you contact this company, or did they contact you? If the latter, especially, remember that if it seems too good to be true, it probably is.
Your description reminded me of a property firm, many of whose clients, who bought to let, posted here that they were not getting the promised rents, and could not sell. Unfortunately I can't find the thread.

Steve_xx

The whole thing sounds rather unlikely to me. If the OP needs an extra £300 a month then the £65k they have in the bank would yield that for the next 18 years, and that's without any interest being added to the capital while it's in a bank.

innovate

Steve_xx wrote: »

The whole thing sounds rather unlikely to me. If the OP needs an extra £300 a month then the £65k they have in the bank would yield that for the next 18 years, and that's without any interest being added to the capital while it's in a bank.

How would that be achieved?

Steve_xx

innovate wrote: »

How would that be achieved?

65k divided by 300 = 216 months, divide it by 12 to give 18 years worth.

bigadaj

Steve_xx wrote: »

65k divided by 300 = 216 months, divide it by 12 to give 18 years worth.

True but the money is then all gone. Assuming 3% return from say 3 Santander 123 accounts, though wouldn't all quite fit, in then interest initially would be around £2000 per year, much of which may be tax free, so £250 a month, the balance being made up by degradation of capital which will reduce interest and capital overtime.

I would also check benefit entitlements as well, both in terms of what might be available and the impact of this lump sum.

Steve_xx

bigadaj wrote: »

True but the money is then all gone. Assuming 3% return from say 3 Santander 123 accounts, though wouldn't all quite fit, in then interest initially would be around £2000 per year, much of which may be tax free, so £250 a month, the balance being made up by degradation of capital which will reduce interest and capital overtime.

I would also check benefit entitlements as well, both in terms of what might be available and the impact of this lump sum.

Yes of course, and this is assuming that rates are at 3%; they may well be higher over some of this term. But at 3% this would last them 21 years @ £250 per month. The oldest of the pair is 69..........

jimjames

chrisalan wrote: »

The net percentage back for each property would be approx. 8% pa on each property. This seems a good return to us and we wouldn't have to worry of the rental side of it, they do it all. We realise we need to speak to a Financial Advisor, but feel it needs to be one that is particularly knowledgeable with this type of investment, not sure how to find this person. Or has anyone got any other advice please?

I'd say it was more than a good return - more on the side of TOO good to be true returns.

Putting it all into BTL seems a completely crazy idea and I can't believe any regulated adviser would recommend that.

Apart from the hassle of managing a BTL property x 3 the return is very much dependent on interest rates which will only increase from here. How much have they allowed for voids and repairs out of your money?

You also have all your eggs in one basket and cannot sell part of a property if you need money quickly. I'd think a portfolio of decent income producing funds would be a far better option and you can get £60k of that money into ISAs with the increased limits this year and next meaning all the income is tax free.

xylophone

you can get £60k of that money into ISAs with the increased limits this year

£30,000 between the two of them?

On the little information given by the OP, in their position I wouldn't choose this investment.

My inclination would be to use their ISA allowances through a platform and consider a fund paying monthly income - with the balance they might consider the top paying current accounts ?