250k To invest

sorcerer

Maybe £1000 if you get two good tenants, but don't forget about furnture for the houses, getting them up to code, hiring somebody to find tennants. repariing damage they cause, throwing them out if things go wrong. So lets take away £300 a month for costs, leaving you with £700 plus all the hassle... maybe.

And off course being illiquid assets you might not be able to sell when you need too, that is assuming the house has gone up by that point. Maybe it will.. maybe it won't.

If you are happy with all that go ahead and by property

sorcerer

jm78 wrote: »

How much dividend income can one reasonably expect from 250k? I'm also debating over whether to put a similar amount into a cash-bought buy-to-let or to invest in equity funds. Are there funds out there that would really pay dividends equal to rent from a property (net agent fees, maintenance, etc.)?

Plenty of funds and investment trusts that pay around 4% in dividends. Probably better to buy investment trusts, since they are more liquid than funds.

Malthusian

sorcerer wrote: »

Plenty of funds and investment trusts that pay around 4% in dividends. Probably better to buy investment trusts, since they are more liquid than funds.

Not really. Certainly not to the extent the OP should exclude all unit trusts for that consideration alone.

Investment trusts may be repriced throughout market opening hours rather than daily, but that is usually not a meaningful difference unless you are a day trader, i.e. a gambler. For some very niche investment trusts you may have to wait several days or even weeks to sell, because of the lack of buyers.

The fact that they are listed on the stockmarket does not guarantee you will be able to sell or, if you can, that you will get a price at which it makes sense to sell. The fact that the discount / premium can move against you even if the value of the assets is unchanged presents an additional risk.

bigadaj

sorcerer wrote: »

Plenty of funds and investment trusts that pay around 4% in dividends. Probably better to buy investment trusts, since they are more liquid than funds.

You might argue they are more stable and longer term in outlook than oeics, but investment trusts are more complicated for the novice investors, considering such things as premium or discounts on valuation and gearing.

dunstonh

PaulD23 wrote: »

Hi mate,
Believe it or not myself and a number of others are receiving over 3% per month on our investments.
I can put you I touch with my IFA who can advise you accordingly.

Do not act on this post. It is fake. There is no mainstream, regulated option offered via IFAs that can do that.

eskbanker

PaulD23 wrote: »

Hi mate,
Believe it or not myself and a number of others are receiving over 3% per month on our investments.
I can put you I touch with my IFA who can advise you accordingly.

Care to name the product(s) and the IFA?



Thought not....

toffee'n'tom

jm78 wrote: »

How much dividend income can one reasonably expect from 250k? I'm also debating over whether to put a similar amount into a cash-bought buy-to-let or to invest in equity funds. Are there funds out there that would really pay dividends equal to rent from a property (net agent fees, maintenance, etc.)?

This is what I'm trying to decide. Or 50/50.

chucknorris

jm78 wrote: »

How much dividend income can one reasonably expect from 250k? I'm also debating over whether to put a similar amount into a cash-bought buy-to-let or to invest in equity funds. Are there funds out there that would really pay dividends equal to rent from a property (net agent fees, maintenance, etc.)?

Well the dividend income depends which fund that you invest in, and again rental yields also differ, so there is no easy answer. My properties are in London, and I have invested in a ftse 100 ETF, that pays about the same (net of tax) as my properties. But the ftse 100 is risky (due to its lack of diversity), but when I get to 70 (or before, especially if the ftse 100 reaches a very high level) I will switch to a much more diversified etf (like Vanguards high yield world wide etf VHYL http://www.morningstar.co.uk/uk/etf/snapshot/snapshot.aspx?id=0P0000YWPH )

You have to invest in what you are comfortable with, rather than what other people say, it is horses for courses, just be sure you know what you are letting yourself in for.

chucknorris

PaulD23 wrote: »

Hi mate,
Believe it or not myself and a number of others are receiving over 3% per month on our investments.
I can put you I touch with my IFA who can advise you accordingly.

If it's too good to be true..............................

bowlhead99

Doing it 50/50 between funds and a cash-bought BTL property would seem a poor choice if you only have £250k to start with.

For £125k you are not going to be able to buy yourself a portfolio of properties -after putting aside a wear and tear/ maintenance / renovations pot, it'll only buy just the one (and that's assuming you're in a cheap part of the country). So, the risks you mentioned you've been cautioned against (bad tenants trashing the place or not paying and needing to be evicted (or both), empty periods etc etc will be very concentrated as it's a binary effect : either it happens and screws you over, or you're lucky and it doesn't. With only one property you can never get any kind of "average" return.

The 'proper' landlords with whom your rental property is competing for tenants in the marketplace have advantages of having multiple properties, multiple streets/districts or regions, boost returns through financial leverage, and have the ability to cut the price or take operating losses or sustain periods of low income on one property while it's covered by the others. You can't do that for £125k.

So your case you would be putting half your assets into just that single sector, single postcode, single building which could produce lumpy revenue and unexpected costs. While the level of income coming from the remaining £125k of investment funds isn't going to be enough to sustain your lifestyle (when you don't have other savings) let alone provide a good buffer for the lean times when extra money needs to be spent on your nightmare property.

Of course, people can have good experiences being accidental or intentional landlords if they are in the right place at the right time. Doing it when the average house price went up from 3x salary to 10x salary while the tenants mostly covered the mortgages which could be obtained on an interest-only basis at 90% LTV, wear and tear money could be deducted from tax bills even if you hadn't paid any, no stamp duty penalty on second properties; was with hindsight a great move.

If you confidently think those times would return (lenders giving easy money to everyone while the house prices go from 10x to 30x), or your profession is building maintenance giving you an ongoing cost advantage over others- sure, it could be a good idea to get involved.