£400k cash but no home or job....?

solidpro

If you were completely dedicated to only investing in your own future and you had £400k in cash TODAY - but NO home and NO income, which of the following would you do. Where you live, £400k gets a nice 4 bedroom detached house.

1) Buy 3 x freehold properties outright (perhaps Dorset or slightly further out, which has seen 10% value increase last 12 months) with a budget of £133k per property including stamp duty and all other fees, rent out, with the aim of achieving a combined rental income of between 6-8% per year with value appreciation on top. Income pays mortgage on your own £300k house. your part time job is managing the rentals but you have lots of spare time.

2) Buy 10 mortgaged houses with a value of £100k each with a £30k deposit on each, rent them all out and use the surplus income to pay rent on somewhere for yourself to live? Your new 'job' would be managing the rentals. Mortgages on 10 x 25 years £70k mortgages is £3700 a month. Monthly income is £4500 per month. Use £500 surplus to rent a small property away from high prices.

3) Buy a house outright (no mortgage) for £300k and invest £100k in an even split between pension contributions, NS&I, stock market. No job still.

4) Buy a £400k house with a Mortgage with £100k downpayment. and £1600 repayment over 25 years, and use the £300k on a even split between a rental property, pension, NS&I, shares.

Or something else completely?

worried_jim

Buy a 2 bed apartment in Turkey for £60k, put the rest in a Turkish savings account paying 10% interest and live out my days in the Sun struggling to spend the interest.

jamei305

Surely it would depend on where you wanted to live and how much it cost to buy a home. You give only options of a £300K or £400K house or renting somewhere.

First off if you had no income you'd find it very hard to get a mortgage, so there's that.

solidpro

First off if you had no income you'd find it very hard to get a mortgage, so there's that.

You wouldn't need an income to buy a property outright which you could afford.

If you had income from rental properties (of which you have 30-100% ownership), you would have both assets and a provable annual income in order to obtain a mortgage.

oz0707

I'd get a job

jamei305

solidpro wrote: »

You wouldn't need an income to buy a property outright which you could afford.

If you had income from rental properties (of which you have 30-100% ownership), you would have both assets and a provable annual income in order to obtain a mortgage.

You need an income to get a buy-to-let mortgage too. OK there are a couple of providers who may consider giving you one based solely on the rental income, but I am pretty sure they wouldn't let you have 10 x £100K properties at 70% LTV.

solidpro

You need an income to get a buy-to-let mortgage too. OK there are a couple of providers who may consider giving you one based solely on the rental income, but I am pretty sure they wouldn't let you have 10 x £100K properties at 70% LTV.

Ok so lets say 50% LTV as a Ltd property business wouldn't be a problem (I know this to be true if you already own a profitable ltd company) and you spend £200k in deposits on combined £200k property loans getting you 6 x 100k properties. The idea is broadly the same. Lets say obtaining 6+ properties with £400k could be achieved if done though a Ltd company with the credit history that means lenders are happy to lend. Lets say you could break even each month.

Bravepants

Bye a cheap house (£80k or so) up in the Lake District, spend some time doing it up nice and comfy. Invest the rest in S&S ISA by drip feeding £20k a year. Draw down 4% a year to live on (approx. £12k a year, or £1k a month), enjoy days out walking in the lake district, playing my piano and perhaps look for a part time job.


I'm a simple soul really.

solidpro

Invest the rest in S&S ISA by drip feeding £20k a year. Draw down 4% a year to live on (approx. £12k a year, or £1k a month)

If you could only put in £20k a year, wouldn't it take 16 years to get up to £1k return a month? If the stock market tanks, you're only protected to the first £50k?

Mrs_Z

Something on the lines of...
1) Get a job (so you can get a mortgage)
2) £200k into a roof over your head with spare bedroom to be rented out under the tax free lodge scheme (=additional income)
3) £100k into S&S ISAs - £20k per year over 5 years
4) £70k +small mortgage into another property requiring renovation to the tune of £30k. Sell for profit.

Not probably the most tax efficient way of going about things but the question was what would you do...etc The above would address - accommodation, income, investment, + wild card with the small renovation project.

Bravepants

solidpro wrote: »

If you could only put in £20k a year, wouldn't it take 16 years to get up to £1k return a month? If the stock market tanks, you're only protected to the first £50k?

You can earn £11800 a year without paying tax, so you don't need a tax wrapper at the start really do you?


Bung the whole lot in a general account, perhaps with Fidelity as their platform fee is only 0.15% per year. Then drip feed into an ISA from there.


I'm not saying you would get £1k a month, some months you might be down a couple of thousand, some months up. The 4% rule is a long term withdrawal rate (other withdrawal rates are available).

Also, you are certainly NOT protected if the stock market "tanks" anyway. Where did you get the idea that you are protected to £50k ??