Investing in Property Funds, is It a Good Idea?

smashy

Hi everyone!

I have another thread about investing my inheritance money, but wanted to start a new one with this specific question.

Investing in stocks and shares is quite confusing to me, but I always felt attracted to invest in property.

Whilst I don't want to have the hassle of buy to sell or buy to rent, I found out about property funds, where you get dividends from rentals. Things like REIT's and others.

Is this a good idea? How can I know more about this sector and can I make my money grow and have good monthly dividends from it?

Thank you!

MaxiRobriguez

You'd be investing in shares of funds focused on a specific area, one which has typically been cyclical and prone to under-performance during recessionary periods.

You may want to consider a global index equity fund instead, which will give you exposure to other industries, diversifying (and thus lowering) your risk.

It's worth doing more research before making a decision on what you do with your money anyway, rather than rushing into something after you've learned you're not getting 2% monthly from your bank account. Talk to an IFA if it helps.

smashy

MaxiRobriguez wrote: »

You'd be investing in shares of funds focused on a specific area, one which has typically been cyclical and prone to under-performance during recessionary periods.

You may want to consider a global index equity fund instead, which will give you exposure to other industries, diversifying (and thus lowering) your risk.

It's worth doing more research before making a decision on what you do with your money anyway, rather than rushing into something after you've learned you're not getting 2% monthly from your bank account. Talk to an IFA if it helps.

Thank you, I am finding a good IFA yes.

I am just attracted to property. Other thing I thought was to buy a property in a holiday place and rent for holidays.

Zero_Sum

When you say investing in property, what exactly do you mean?
As on the other thread you were saying that you were going to continue renting.
Are you seriously suggesting buying a BTL, whilst not owning your own house?

Apodemus

Wise advice would probably to balance your investments across sectors, since at times some specific sectors do well, while others languish and vice versa.

Having said that, the property portion of my pension has done significantly better than the other parts of it over the last 20 years - although that may say more about the pension company’s abilities with its other investments!

Moe_The_Bartender

There’s nothing wrong with investing in property per se as it can be a useful diversifier from other stocks. I keep about 8% of my portfolio in a variety of REITs although I avoid retail, preferring industrial and logistics, surgeries etc. I don’t invest in OEICs because of the danger of being locked in in a downturn and some hold lots of cash to meet early redemptions because of the illiquid nature of property. If I want to hold cash, I don’t need to pay someone to do it for me.

For a decent REIT with a good range of investments, look at TR Property Investment Trust.

smashy

Zero_Sum wrote: »

When you say investing in property, what exactly do you mean?
As on the other thread you were saying that you were going to continue renting.
Are you seriously suggesting buying a BTL, whilst not owning your own house?

I am thinking about buying a house to rent for holidays bookings.

I still have to research more into this of course, but the location I am thinking (not UK), they have apartments for sale inside 4 star resorts near the beach for as low as 70k.

These properties are fully booked during the summer months (which is May to September) and owners make large profits from it. They are usually booked in the Winter too although prices drop.

The other option is renting to a normal tenant all year round.

For a 70k property the deposit I need would be very low and the monthly mortgage repayments very low too.

I can invest the rest of my money into pensions, etc, and still use the profit from the holiday bookings to help pay the mortgage quickly whilst still make a profit that I can invest as well.

And then rent a house for me during this period and buy one for me to live later on.

The properties to buy to live in my area are all quite expensive (minimum 180k).

I don't know if this is a good strategy since I still have to research more and get a good IFA, but I like this idea.

Moe_The_Bartender

smashy wrote: »

I am thinking about buying a house to rent for holidays bookings.

I still have to research more into this of course, but the location I am thinking (not UK), they have apartments for sale inside 4 star resorts near the beach for as low as 70k.

These properties are fully booked during the summer months (which is May to September) and owners make large profits from it. They are usually booked in the Winter too although prices drop.



For a 70k property the deposit I need would be very low and the monthly mortgage repayments very low too.

I can invest the rest of my money into pensions, etc, and still use the profit from the holiday bookings to help pay the mortgage quickly whilst still make a profit that I can invest as well.

If someone is selling a highly profitable apartment so cheaply, you have to ask yourself why.

Apodemus

smashy wrote: »

I am thinking about buying a house to rent for holidays bookings.

I still have to research more into this of course, but the location I am thinking (not UK), they have apartments for sale inside 4 star resorts near the beach for as low as 70k.

These properties are fully booked during the summer months (which is May to September) and owners make large profits from it. They are usually booked in the Winter too although prices drop.

The other option is renting to a normal tenant all year round.

For a 70k property the deposit I need would be very low and the monthly mortgage repayments very low too.

I can invest the rest of my money into pensions, etc, and still use the profit from the holiday bookings to help pay the mortgage quickly whilst still make a profit that I can invest as well.

And then rent a house for me during this period and buy one for me to live later on.

The properties to buy to live in my area are all quite expensive (minimum 180k).

I don't know if this is a good strategy since I still have to research more and get a good IFA, but I like this idea.

Ok, now you’ve got alarm bells going off for me all over your suggestion. Buying overseas in a market you may not fully understand and a legal system you may not fully understand, conducted in a language you may not fully understand? What could possibly go wrong!

And that is before buying a property “in 4 star resort”, which sounds like you may be within a development where you don’t have full control of the property?

chockydavid1983

Keep it simple - just invest in a mix of global equities and bonds...

mollycat

I don't mean this unkindly but I think someone has to say it

I've read both your threads; maybe I'm overly sensitive to these kind of things, (apologies if so), but your posting is screaming "accident waiting to happen" in a financial sense.

Given your starting level of knowledge, (the interest rate thing exemplifying it), rather than doing the bits of reading and coming up with less than ideal ideas, can't you just find an IFA and see what he/she proposes?

Maybe get some forum opinions after this.

Nothing wrong with DIY or educating oneself, but I can't be the only one here who has "the fear" with regards the money you have inherited and some of the ideas you seem to be considering.

I wish you well; good luck.