Graduate with investment funds, but clueless!

AdrianC

Jonobo92 wrote: »

my brother currently owns and lets two properties himself in our hometown, and so that is what drew me towards that idea.

So you have access to somebody with experience, who you trust, and who can give you advice focussed on your specific local market.

Why ask us?

I'll also be living with my brother in his house all expenses paid

That's very generous of him...

and the BTL could be bought under his name, or through his property company?

You mean you would lend or gift him the money for him to buy another property.

aneary wrote: »

I would watch a few episodes of homes under the hammer.

Daytime TV should not be a great surprise to a student.

His brother will, I'm sure, be only too happy to recommend a local plant hire firm to provide a suitably-sized digger and dump truck to move a large enough pinch of salt into place...

Jonobo92 wrote: »

Owning my own home doesn't interest me as my brother's place is more than enough for us to live in comfortably

Do neither of you plan to have a partner at any stage?

This may be wrong but as I see it, if I put a £30k deposit on a £65k house, paid it off over 10years and then sold the house for £65k again, that would be profit of £35k, or £3500 per year before tax. Are there any other investment avenues that could return £3500pa from a £30k deposit, or have I completely missed the mark with those sums?

It would not be profit of £3500/year. You seem to have forgotten about the interest on the mortgage (around £120/mo at 4%), the costs of maintaining and improving the property, and any other costs arising.

Work on a rough return of 4-5% before tax, and you're probably being optimistic. Then look around for other, lower-work and lower-risk, investments at around that return or better.

hazyjo

Jonobo92 wrote: »

This may be wrong but as I see it, if I put a £30k deposit on a £65k house, paid it off over 10years and then sold the house for £65k again, that would be profit of £35k, or £3500 per year before tax. Are there any other investment avenues that could return £3500pa from a £30k deposit, or have I completely missed the mark with those sums?

No mortgage interest?! Purchase/selling costs?

Crashy_Time

rentmekid wrote: »

why not invest in property?

http://news.sky.com/story/applications-from-eu-nurses-to-work-in-uk-down-96-since-brexit-vote-10913295

Jonobo92

Thanks for the responses, the dream was to spend a few years building a portfolio of properties that would eventually be handed over to a management service, creating as close to a passive income as possible. I realise this may well be just a dream!

It seems I definitely need to revise the figures involved in purchasing/managing/selling property (basically all aspects!).

Out of interest, how would you all invest the money, assuming you had £90k cash and already owned your own home? Would it be within property itself, REITs, or a different market altogether? (I assume as I am on this board there may be a bias towards property).

AdrianC

<points to Savings & Investments board>

If you decide property IS the right solution, THEN come and ask here about specifics. Right now, you're jumping the gun.

DumbMuscle

Jonobo92 wrote: »

This may be wrong but as I see it, if I put a £30k deposit on a £65k house, paid it off over 10years and then sold the house for £65k again, that would be profit of £35k, or £3500 per year before tax. Are there any other investment avenues that could return £3500pa from a £30k deposit, or have I completely missed the mark with those sums?

Your total costs are:

£30k deposit
Plus £35k+interest from paying off the mortgage (assuming a generous 2% rate, you would pay £3,650 interest on a repayment mortgage, and £7k on an interest only)
Plus costs from buying and selling the house (probably about £2k at a very generous estimate)

So the house price would have to go up by £5-10k just to break even, before you even count costs to maintain the property, or the fact that all of the above estimates are wildly optimistic

Your profit estimate doesn't just ignore mortgage interest - it ignores the money you are paying towards the mortgage! If you don't think that the bank will want their mortgage money back eventually, then I suggest you engage in peer-to-peer lending by giving me a loan on those terms!:rotfl:

Jonobo92

Makes sense, I'll head over there and ask for advice.

Thanks for all the quick responses everyone.

aneary

Jonobo92 wrote: »

Thanks for the responses, the dream was to spend a few years building a portfolio of properties that would eventually be handed over to a management service, creating as close to a passive income as possible. I realise this may well be just a dream!

It seems I definitely need to revise the figures involved in purchasing/managing/selling property (basically all aspects!).

Out of interest, how would you all invest the money, assuming you had £90k cash and already owned your own home? Would it be within property itself, REITs, or a different market altogether? (I assume as I am on this board there may be a bias towards property).

I'd invest it in property however I have two things which you may not have, a father who is a carpenter with over 40 years of experience on commercial and private work so buy a house do it up and rent it out with a built in handy man. Second my mother is a solicitor so all contracts and most legal costs would be covered.

If I didn't have parents in those positions I would probably have a mix spread in shares and savings but this would be a long term portfolio not short term.

In your position being fairly young and having the opportunaty to make more money through employment I'd buy a home outright and hold some savings for a rainy day.

Crashy_Time

rentmekid wrote: »

why not invest in property?

http://www.independent.co.uk/news/business/news/us-federal-reserve-raises-interest-rates-by-further-025-a7790446.html

deFoix

OP if you had any brains you would invest in yourself. 90k is not that much considering its earning power vs the earning power of yourself as an individual over time. In other words get a job and get some experience. Your idle Fantacies about investing in the property market are just that.

For example can you explain why you wouldn't just instead invest it all in a low cost ETF ISA fund tracker e.g. MSCI World Index?