Cash or property

CEON44

With so much talk of impending doom in the economy im looking for some advice. I have enough cash to buy a sub 100k property. So is this a good idea at the minute or would it be better to keep the cash. Cash is not invested nor tied up so just getting 1.5% in Chase account. My worry on the property side of course is we may be at a peak and over the next few months this could devalue greatly. Any thoughts?

masonic

Are you referring to a buy-to-let property, or primary residence? This would make a big difference to the answers you would get. I have assumed BTL. Rising interest rates and a potential recession are the perfect drivers of a housing crash, and the government is perhaps not in a position to intervene to prop up prices this time as they have in the past. Cash is not a great option either when double digit inflation is forecast and the UK is likely to have rather more persistent inflation than elsewhere in the world. What are your long term plans for this money?

robinwales

Repay all debts you have that charge interest. If you are planning for certain major projects for the home AND you are going to stay there you might want to bring them forward. We recently had a new Sigma kitchen. Our old kitchen had a few years left, but I thought inflation would rise a lot so we went ahead and paid £20k a few months ago. When it was finished the salesman told us a price rise was imminent, and it was quite a lot we potentially saved. Same for a car. If you are planning a new one soon you might want to do it now, prices are rising already for new cars. I'm talking about cash purchases here, but you want to make sure you have enough cash reserve for any serious downturn.

ZeroSum

Property can be a lot of work, and there's the risk of a bad tenent who'll smash the place up / don't pay rent etc 

Brie

You should check what's happening in your location in particular as that may be very different to what others of us are seeing elsewhere.

mongoose2009

hopefully a nice correction to massively over priced houses

I see 30% drop to get back to fair value

and that will mean first time buyers can get on the property ladder

CEON44

masonic said:

Are you referring to a buy-to-let property, or primary residence? This would make a big difference to the answers you would get. I have assumed BTL. Rising interest rates and a potential recession are the perfect drivers of a housing crash, and the government is perhaps not in a position to intervene to prop up prices this time as they have in the past. Cash is not a great option either when double digit inflation is forecast and the UK is likely to have rather more persistent inflation than elsewhere in the world. What are your long term plans for this money?

Yes. Buy to let. No real long term plans to be honest.  Im 65 and not really sure what to do with it

CEON44

No debts that im paying interest on. Its just that i have no real need to spend the money and dont really want to invest in stocks etc at this volatile time. So thinking of BTL for maybe 5 years?? Other than that just hold  the cash as rates are going up

Pompeydave1967

Although not the same age (I’m 55) I’ve also considered similar idea to yourself but 100k won’t buy anything in the south so it would have to be a flat or similar miles away and totally in the hands of letting agent to manage and maintain property. For me too much hassle and as mentioned above there is that chance of a rogue tenant. You could prob get approx £250+ month with a 3 yr fixed which would be only a bit less than actual rent you receive .

masonic

CEON44 said:

No debts that im paying interest on. Its just that i have no real need to spend the money and dont really want to invest in stocks etc at this volatile time. So thinking of BTL for maybe 5 years?? Other than that just hold  the cash as rates are going up

Five years is fairly short-term. When you add up all the costs, factor in difficulties with tenants, and then the possibility of a downturn in the property market, the net returns you might make are unlikely to justify the risks. Just my view, of course. If you are against investing at this volatile time, then perhaps holding in cash in the short term is the better option. You could always start to drip feed into investments when things don't look quite to scary, although again, 5 years is not really sufficient time for many investment options.

GSP

mongoose2009 said:

hopefully a nice correction to massively over priced houses

I see 30% drop to get back to fair value

and that will mean first time buyers can get on the property ladder

Wouldn’t that be great. Who wants to pay more for their house anyway!
Homes should be for living in, not making money out of and I hate to see the word investment used in the same sentence as property.

I’m still waiting for Osborne’s prediction, or was it a lying threat that there would be a housing crash 15-20% as soon as the country voted to leave.

All I know is interventions, govts or policy makers seem to have made things a lot worse. In the past, sector's were allowed to find their natural level over time.