Investing £850k in property

letitbe90

charlottesometimes wrote: »

Yes and by that I mean for example flats, maisonettes, terraced, two bed terraced, three bed terraced, semi detached, bungalows, property with large gardens and so forth and any supporting advice or experiential advice why one is better than the other or one is requiring more knowledge and experience than another etc

For example I'm of the general opinion that Flats can be more problematic than terraced houses although they can generally be a higher rate of return and to make matters more complicated I've been told that Flats and Maisonettes don't and haven't appreciated to the same extent than other types of houses have been

In short it doesn't seem anywhere near as simple as I had imagined. There's not really a "property investor type expert" you really can hire for this.

I know what you are trying to do - my advice still stands, stay clear of forums. People will post things and I can't think of anything worse than being influenced by anecotes on a forum - and that is what you are exposing yourself to.

foxy-stoat

With that amount of money you need some paid financial advice.

Cakeguts

What kind of property you buy depends on the area you are buying it in. For example in the Manchester area there are a lot of 2 bed terraced houses. If you want a good tenant you wouldn't want to buy these in certain areas. Don't buy anything in an area that you don't know.

Hoploz

What's your exit strategy? Are you wanting to make a few quid income for retirement, or do you want to maximise potential?

Think ahead ... Your own estate could be liable for inheritance tax with this windfall. Just thinking unless you plan carefully you might not see the benefit. Is there any point in taking a risky strategy, taking on additional borrowing, just to end up giving the profits to the government in the end in IHT and/or CGT!?

I think I would probably buy one or possibly two average family size properties in my local area - easiest to maintain and look after when they're nearby and would rent well. I would keep it simple.

sparkey1

My opinion. Look locally.

I have property in London (where I used to live) and the South West. Its a 4 hr drive each way to London, and although I can manage them myself easily enough, its a lot quicker to manage the ones in the South West rather than London.

Rented houses can experience far greater wear and tear. My biggest costs being plumbing. Being a landlord is not easy and is full of legislation.

Have you looked at something like peer to peer. Ratesetter and Zoapa are a good place to start. Riskier investments probably, but your not likely to end up in jail when it goes horribly wrong!

AlexMac

Thanks for the kind words.

I really have no experience of any investment other than my own small-scale dabbling in property, but in respect of your added comments ...

charlottesometimes wrote: »

... I've always aspired to a life in London. ... I know people who owned houses in London that literally went up £100k within a year so I naturally have a very positive view of London and would like to try to do something in London but don't know how or where to start.
...

...I'd say

London, is, I think now too inflated price-wise. For example even in my home area of SE London (one of the cheaper areas) there is virtually nothing for sale under £200k and few 2-bed places (which I find tend to let very successfully; often to long-term tenants) under £300k.

Although some currently rough/cheaper areas like parts of Woolwich and Plumstead are said to be set to rise with new rail services, I'm doubtful. I don't think you'll get capital growth as we have seen in the past; I paid £152k six years ago for an ex Council flat in Kidbrook in transport Zone 3 - so a reasonable commute - but that would cost £260- £275k now, and I can't see any comparable rises in future.

Better, for investment and rental yield purposes, I think, to look at towns outside London, where flats or houses are still affordable; a quick google search reveals dozens of articles suggesting locations;
http://bfy.tw/JFhn

Or if you really want to live in London, do that as a lifestyle choice; maybe pile some of the money into a home, although that won't produce income. Prices have actually dropped 5% in my area in the last 12 months and dearer homes aren't selling, although "cheaper" properties (under £500,000) are turning over fast.

But given that I endorse the comments in the posts immediately above about buying locally (for ease of mangement) and in an area you know, I think the midlands or North would be safer.

As regards

charlottesometimes wrote: »

...
I'm tempted by Flats but then scared off by the problems that flat owners face ...

Nothing intrinsically wrong with flats; just check lease length and annual Service Charges (and how maintenance is funded) before comitting. I've generally gone for "Shared Freeholds" where the individual flat-owners (the leaseholders) own and control the Freehold Company and my service charges have been £450 -£1300 p.a. And that included a "sinking fund " kitty for major repairs. But friends nearby in a new development owned by a big Corporate (aka Capitalist/ profit-making) Freeholder paid over £5,000 p.a on a 2-bedroom flat. The Council have also been good-value freeholders of my two rental flats with service charges of £700-£800 p.a

charlottesometimes wrote: »

... The problem with "gradual interest rate hikes" is as you mention the 15% hike which I think was the 80's then at that time nobody saw it coming and the same with the banking crisis in 2008 ...

I'd bet money on there being no return to anything like 15%. That mid 1980's peak was preceeded by inflation at 10% p.a and comparable interest rates (I paid 10% fixed on the mortgage for my 1st buy in 1975) . I joked about Carney, but I think his prediction yesterday about gradual annual hikes of 0.25% p.a. up to about 3% max is spot on....

And while I have no time for Bankers, I think the worst excesses ,which tipped them over the edge, have been curbed...

But then I'm a glass half full sorta guy.

Get onto Zoopla and play with the data about prices, trends and work ot rental return-to-value in some of the locations in that Google link above.

Happy researching!

AnotherJoe

charlottesometimes wrote: »

I also have known friends like you who bought a house for a £1 and it's now worth £1,000,000 and of course I know people who owned houses in London that literally went up £100k within a year so I naturally have a very positive view of London and would like to try to do something in London but don't know how or where to start.

Except thats historically based and very unlikely, indeed almost certain not, to repeat itself. Because a house that went up a hundredfold or £100k in one year, simply cannot go up another hundredfold or £100k indefinitely, whose going to buy it because wages didnt rise one hundredfold.

Indeed London prices appear to be coming down now so by investing in London now you'd be making the classic investing mistake of chasing returns, which is a losing strategy as you tend to buy at or near a top.


Its also worth pointing out other issues with your plan.
1. "London" is a big catch all. There's no such place, you'll actually live in , say Brixton or even Ealing and in fact in a particular street in Brixton or Ealing, and so your experience will be in large part very local rather than some generic "London" experience.
2. Lets say someone bought in Brixton for £100k and the house is now worth £1M. Unless they move to, say East Anglia, that money doesn't actually help them do anything. They cant go on first class trips to the Maldives with that £900k, its not money in the bank.
3. You seem to be confusing investing with living somewhere. Its rare the two coincide. Decide where you'd like to live, and rent (initially) and then buy if it makes financial or emotional sense. And invest for your aims seperately, which may be in property or may be something else that is far less hassle.

steampowered

charlottesometimes wrote: »

of course I know people who owned houses in London that literally went up £100k within a year so I naturally have a very positive view of London

Think of investing like shopping.

Would you rather go shopping when clothes have just gone up in price? Or when they are on a 50% off sale?

If an asset has recently massively increased in price, that usually suggests it is now fairly priced or over priced - not that it is cheap for what you are getting.

Noone has a crystal ball but I think it is very unrealistic to expect that London house prices will continue. Centrally located 1-beds can go for £500k these days - there is only so much that people can afford.

Personally I would consider a balanced portfolio of longer term stocks and shares. That is very likely to perform well over the long term.

jonnygee2

Putting your entire windfall into a single asset class doesn't seem sensible to me anyway, especially in the current market. The fact that you want to do this for 'emotional reasons' and then don't want to leverage because you are scared about risk hints you may have a lot to learn about asset management.

If you do just want to buy property, I'd buy cash, no leverage, and close to somewhere you know, and keep good portion back in a much more liquid form. If that goes well, you can borrow later on what you have to expand the portfolio.

00ec25

agrinnall wrote: »

I'm not sure what relevance your qualification (whatever it is, and if you even have it) has,

I assume that is rhetorical since OP is asking for financial advice on where to invest. and in order to give such advice you have to hold a legally recognised qualification in investment advising, which that poster does hold.
The forum rules also expressly forbid anyone from giving financial advice for exactly that reason.

OP go find a professional financial adviser who can guide you through your options. You have a life changing sum of money, which you state you will never be able to repeat yourself and as you have said noting about your personal circumstances your blinkered vision based on emotion and limited knowledge that it "has" to be property is a very poor start point. It seems you have very little idea of the impact of taxation on various investment classes, and certainly how it will impact leveraged property.

If all you want is anecdotes then use the search function: should I "invest" in property has been "explored" countless times.