Advice, what would you do?

micky007

Hi,

I've never been in this position before and need some advice. My dad bought quite alot shares on the AIM market last year and they've gone through the roof. He's now going to to sell them and sort myself and my sister out by paying off our mortgages or we can do with the money as we please. I currently have a property (at today's market) worth £380,000) which I currently rent out at £1,250 a month. I've been trying to think of what the best thing to do is and need some advice. My thoughts are as follows:

1) Pay the house off (320,000 left on mortgage). Then £1,250 is pure profit from the tenants. Keep my full time job (which I'd do no matter what else I'd get bored) and put that rent money to one side so for each year for the next 3 year's I can put a deposit on an additional property and rent them out (repayment mortgages).

2) Don't pay the house off and purchase 3 properties at auction and do them up then rent/sell once complete.

3) pay half house off and 1 by 1 put a large deposit down on other houses and rent them out.

4) pay my house off and enjoy the simple life of an extra £1250 in the bank every month.

5) something else?

What would you do? Ideally I don't want to do number 4 as i like keeo busy/challenges.

Any advice would be great. Thank you.

MaxiRobriguez

You already have a property worth a fair wedge, if it were me I'd be looking to diversify my investment, not narrow it further.

Which would leave two choices:
1) Pay off the mortgage and use the rental income to invest in other things, probably pension your best bet.
2) Retain the mortgage and use the capital to invest in other things, probably split ISA/pension.

Also, buy your dad a nice bottle of wine or 50 as a thank you.

colsten

Your Dad should seek the advice of an Independent Financial Advisor, or at least of an expert in inheritance planning as there are circumstances in which the gifts might form part of his estate.

I echo MaxiRobriguez comment that you should consider diversifying your investments, away from property.

BarrySmart

It is obvious some stocks are great value at the moment however some may need time. Therefore for relatively low stress free investments I agree it is an IFA you need. 

Old_Lifer

A word of caution.    You do not say that your father has sold the shares, only that he is ' going to sell '  the shares.      AIM shares can increase in value  very quickly  but they can also fall very quickly. 

Albermarle

Any advice would be great. Thank you

The large majority of regular posters on this forum , are investors in financial products ( pensions , ISA's , cash savings etc ) rather than in property/BTL etc.  ( apart from their own home ) . So the advice will always tend to go in that direction, although in your case it does make a lot of sense to diversify away from just one asset class.

MaxiRobriguez

Albermarle said:

Any advice would be great. Thank you

The large majority of regular posters on this forum , are investors in financial products ( pensions , ISA's , cash savings etc ) rather than in property/BTL etc.  ( apart from their own home ) . So the advice will always tend to go in that direction, although in your case it does make a lot of sense to diversify away from just one asset class.

There's a reason for it, beyond just personal preference - in that for most it's tax efficient and gives opportunity to invest more easily in diversified products.

Nothing wrong with a BTL but OP already has £400k in this game.

LHW99

If its a large amount, hope your dad is keeping an eye on the capital gains and any possible tax position.