Whats the best way to invest my money into property?

Robster_London

Hi all

First time poster and buyer here. I require some help making the right decision in regards to my savings and what to do with it.

Apologies for the wall of text....

I am not particularly financially minded, have never bought a property before, and am a bit clueless when it comes to such things unfortunately. I currently live at home with the folks and am looking forward to moving out early next year. I work and live in a rural area of Lancashire where property isn't astronomical at the moment.

Bit of a short story first; My father retired and sold the family business in the early 2000s and very generously gave us part of our inheritance early. It was £200,000 at the time, a healthy amount for a house back then. I am eternally grateful and am lucky to be able to start on the property ladder mortgage free.

Since then I have moved out of the home and lived around the UK chasing jobs and not been able to settle down or find a stable career. I have since moved back into the parents house and got myself a steady local job.

I'm currently earn about 13k a year in my job, with the possibility of a small pay rise in the future - not much but I've no plans to change my career anytime soon - I enjoy what I do and I find it interesting. I still have £190,000 left in my savings after paying off tuition fees, moving out fees and etc.

So now i'm weighing up my options on what to do next year:

1) Buy locally and live in it: The first, safest, and most likely option is for me to buy myself a property in the local area, if I were doing this, i'd like to invest 100-120k into a house nearby with 2-3 bedrooms and rent the extra room(s) out for additional income. Keep the rest of the money in savings/ISAs/investments and emergency funds, try to save up for a second property to buy-to-let in the future. Ideally the rental income would help me cover maintenance, tax and etc. for the property and leave me with plenty of pocket money.

2) Get a buy-to-let property from the outset: Buy a ready to let student house in Manchester and rent it out, spend roughly the same money. Stay at home in the mean-time and apply for a mortgage to move out, leaving enough money for a healthy deposit. I'd only get income over term time and the property may stay empty over summer? There will obviously be pros and cons with this and i'd like to hear them.

3) Pipe dream: If I were to win the lottery tomorrow, one of the first things i'd do is buy a property within the European Alps. As an avid ski-boarder, motorcyclist, fell walker and nature lover, I crave the mountains and the outdoor lifestyle. My idea here is to buy a holiday let in Austria and get to use it for at least a couple weeks in the summer and winter, live in the UK in the mean time. Margins for profit won't be as steady and it isn't even guaranteed. This is what my heart wants more than my brain if that makes sense. So far i've been looking at properties in the Carinthia region of Austria, but am open to France/Slovenia etc. (Italy and Switz seem out of budget for me)

4) ???? Put the money into investments/stock etc...? I have zero knowledge of this but my dad uses a good accountancy firm for his investments so I could possibly ask them.

Anyway, advice is very welcome and sorry for the long post!

Pixie5740

Option 2:

Student lets can generate decent rental yields but they can also require the most work. Letting property is a business as well as an investment so you should put together business plan. You'll also need money set aside for repairs, maintenance, voids, legal costs, lots of things and once that £190k is gone or tied up in property your £13k income won't go that far if something goes wrong.

How much of a deposit would you leave aside for buying your own place? Have you looked at some mortgage calculators to see how much you could realistically borrow with an income of £13k?

Option 3

Wouldn't we all. I'm settling for a place near Aviemore since I can throw my snowboard in the boot and can drive there in a few hours.

If you went for this option where would you live? Would you have any money left over for a deposit or to buy your home? What are the operating costs of running a holiday let in the Alps? Would you have enough money to cover these costs? Would you be able to afford the air are out there?

What about just moving out to this area and running a guest house or setting up your own business there? That would be pretty cool.

Option 4

Read "Smarter Investing" by Tim Hale.

Option 1

This seems the most sensible of your 3 option. You need to live somewhere and with your income being pretty low this seems the most realistic option for you to buy your own place and get some extra income from lodgers. You could also combine this option with 4 and then maybe either 2 or 3 further down the line.

booksurr

option 5
spend some of your inheritance on an education so you get a career and can afford to buy a property without dreaming about things you cannot afford to maintain

racing_blue

One things stands out to me - you are sucessfully separating heart and head. Otherwise, you would not still have that £200k from 10+ years ago.

You can of course spend time in The Alps doing all the stuff you love without owning a property there. In fact, owning a property there might mean you spent more time maintaining and fussing over it that doing the stuff you love in the mountains.

I think (1) sounds like a very fine plan. You'd have a house, rental income, and about 6 years salary tucked away in cash too. Not many people would shake a stick at that.

Robster_London

Pixie5740: Thanks for all of that, some great food for thought, no haven't done any mortgage calculations yet but will do some night time reading on this site.

Celifein wrote: »

Re: 4)

Future Learn is starting a course on investments early next year.

(It's free.)

Joined! :beer:

booksurr wrote: »

option 5
spend some of your inheritance on an education so you get a career and can afford to buy a property without dreaming about things you cannot afford to maintain

I actually did all this under a decade ago (hence the <10k) and to cut a long story short, it didn't work out. I'm In a job now in a completely different industry that if I make the right noises has the potential for progression, also I sometimes enjoy it which is a plus.

racing_blue wrote: »

One things stands out to me - you are sucessfully separating heart and head. Otherwise, you would not still have that £200k from 10+ years ago.

You can of course spend time in The Alps doing all the stuff you love without owning a property there. In fact, owning a property there might mean you spent more time maintaining and fussing over it that doing the stuff you love in the mountains.

I think (1) sounds like a very fine plan. You'd have a house, rental income, and about 6 years salary tucked away in cash too. Not many people would shake a stick at that.

I treated the savings as not my own, which helped me not diving into it unless it was essential. This is great advice reg. the holiday let and helps clear my head a bit. Thanks :beer: