Best way to use savings to generate second income.

Ibl0010

I and a friend had a conversation the other day about how savings does not generate a great deal of return for saver any more. We both agree that it would be better to invest. His first idea of investment is to put about 17 k each towards buying a property up north (eg Middlesbrough, Yorkshire) to renovate and then rent or sell it on for profit. My response to him on the idea of property was that even up north (someone correct me on this if am wrong) i doubt it's possible to buy a property for 34 k. Surely it's not possible to buy a property for 34k or is it?

His second idea is to put some of our savings toward buying and selling products online like ebay.

Is any of his idea a good way to generate better returns than what banks are offering on saving or is it better to just carrying on saving.

P.S. We are open to suggestions on what to invest in to make savings grow.

colsten

Ask your friend

• where he will find the £34K property
• how much the renovation costs
• how the renovation will be funded
• who will do the renovation
• who will find tenants
• who will manage tenants
• how much rent the property will yield net after all costs (incl periods of non-occupation)
• how much tax there is to pay

Ask yourself

• what your short, medium and long-term expectations and objectives are
• whether you have your pension provision sorted out
• whether your emergency cash reserve is in place
• what would happen if you'd fall out with your friend

Aretnap

It's certainly possible to buy a property for much less than £34K - here's one I found with a few seconds searching.

http://www.zoopla.co.uk/for-sale/details/37146296?search_identifier=928203813a2a2104f7ad4948fcba5171#7GZLjulPrshBQi03.97

Whether or not it's a good investment opportunity is a different question, of course. Do you have experience of renovating houses? It's certainly possible to make money by doing it - but many amateurs underestimate the costs involved, or the amount of work, or are over-optimistic about what the resale or rental value will be once it's done, so you shouldn't assume it will be easy money. And if you're based down south and are trying to buy and renovate a house in Middlesbrough that adds further practical issues to think about.

Ibl0010

I like your points. Very clear and straight forward. I am not a huge risk taker especially with money. Probably explains why I have just been saving though it doesn’t generate a huge return.

What do you think of the idea of using some of saving to put and sell products online. Even if only few product are sold each week. It will probably still get better returns than saving money in bank.

AndyT678

Ibl0010 wrote: »

I and a friend had a conversation the other day about how savings does not generate a great deal of return for saver any more. We both agree that it would be better to invest. His first idea of investment is to put about 17 k each towards buying a property up north (eg Middlesbrough, Yorkshire) to renovate and then rent or sell it on for profit. My response to him on the idea of property was that even up north (someone correct me on this if am wrong) i doubt it's possible to buy a property for 34 k. Surely it's not possible to buy a property for 34k or is it?

Lots of risks and issues already identified with this but I'd also add solicitors costs and survey costs which will be a relatively high percentage of your purchase price.

Ibl0010 wrote: »

His second idea is to put some of our savings toward buying and selling products online like ebay.

This is more commonly called starting a business. Many of these fail.

Ibl0010

Aretnap wrote: »

It's certainly possible to buy a property for much less than £34K -

Whether or not it's a good investment opportunity is a different question, of course. Do you have experience of renovating houses? It's certainly possible to make money by doing it - but many amateurs underestimate the costs involved, or the amount of work, or are over-optimistic about what the resale or rental value will be once it's done, so you shouldn't assume it will be easy money. And if you're based down south and are trying to buy and renovate a house in Middlesbrough that adds further practical issues to think about.

Maybe I am wrong then with that find but at 25k for that property which just needs updating it seems too good to be true. I mean, the pictures of the inside and outside seems okay buy cause how can't judge how good or bad the structure is just by the picture.

Ibl0010

AndyT678 wrote: »

Lots of risks and issues already identified with this but I'd also add solicitors costs and survey costs which will be a relatively high percentage of your purchase price.



This is more commonly called starting a business. Many of these fail.

In your opinion what would be a good investment or even business idea that some of savings can be used on to generate better returns than those currently offered by banks or is it simply better to keep the all saving in the bank.

AndyT678

Ibl0010 wrote: »

Maybe I am wrong then with that find but at 25k for that property which just needs updating it seems too good to be true.

£25k! What could possibly go wrong!

I imagine that the local estate agent and the local inhabitants will have a pretty good idea of its worth.

I may be jaded and overly cynical but you'll probably find that it is located in an area of the city that is normally on fire and that most people will not want to go near leaving you with a small pool of less than perfect tenants who will not pay rent and rip out all the plumbing and wiring to sell for scrap.

Ibl0010

AndyT678 wrote: »

£25k! What could possibly go wrong!

I imagine that the local estate agent and the local inhabitants will have a pretty good idea of its worth.

I may be jaded and overly cynical but you'll probably find that it is located in an area of the city that is normally on fire and that most people will not want to go near leaving you with a small pool of less than perfect tenants who will not pay rent and rip out all the plumbing and wiring to sell for scrap.

Me and you think alike. I don't think a property would be sold that low if there is no hidden clause somewhere. We all stereotype but you hit the nail on the head from every angle.

colsten

Aretnap wrote: »

http://www.zoopla.co.uk/for-sale/details/37146296?search_identifier=928203813a2a2104f7ad4948fcba5171#7GZLjulPrshBQi03.97

If it was such a good investment, why is it on the market for more than a nano-second?

There must be good reason why the professional property developers haven't snapped it up yet.

missile

Stick to what YOU know rather than risk your hard earned(?) savings on some get rich quick scheme.