What to Invest in?

emmat1707

Hi all, 

I am due to inherit around £250k and am unsure of the best way to invest this. I have been thinking about buying a property and letting it out would this be the best option? I currently am lucky enough to have no rent or mortgage. 

Thanks all! 

InvesterJones

We can't decide the best option for you, and certainly not without knowing a lot more.

What is your current pension situation? How long is it until you'll be accessing your pension? When else would you be looking to spend this investment? What's your appetite for risk? Are you a tax payer? etc. etc.

dunstonh

I have been thinking about buying a property and letting it out would this be the best option?

At a time when many landlords are calling it a day, what makes you think that you would do it right?
Property is still viable but its not the easy option it once was.   

ButterCheese

I would echo the above.  My parents are in the same situation and have just opted to purchase a rental property.  The tenant is elderly and has kept the place immaculate so in that sense they are quite lucky.  But my Dad will have to do a lot of work on the place to get it up to good standard, as lots of it has just been left by the previous landlord.

If you're not in a position to take over an existing tenancy then you will have to choose wisely and do all the background checks.  You could also have it managed by a letting agent who will of course charge to find a tenant, not necessarily do a very good job of it, and who you get in would be down to luck.  Also this would take 12% (or whatever they charge) off your monthly income.  

My view on it to my parents was:  If it were me, I would not want my savings tied up in yet another rental property.  I'd rather put it in savings and potentially only get 2-3% on it, but the alternative is potential stress, being called up for emerging problems, risk of tenants not paying and then trying to get them out.  You've also got all the other costs of buying a property (solicitors fees, estate agents fees etc).

The thing is, people tend to think that if they are only getting 2% on their savings when they could be earning more from property, then they have "lost" money.  My view is that you only lose money if there is no interest being paid i.e. yes the value of your saved pound is worth a little less each year and the interest rate you receive may not keep up with that, but for me it's less worry, more easily accesible if you want to buy a yacht or a new roof for your house, and less responsibility

Voyager2002

emmat1707 said:

Hi all, 

I am due to inherit around £250k and am unsure of the best way to invest this. I have been thinking about buying a property and letting it out would this be the best option? I currently am lucky enough to have no rent or mortgage. 

Thanks all! 

Becoming a landlord is essentially starting a business. If you want to learn about any line of business and operate successfully, then you have the capital. If you simply want to invest (that is, provide the capital for someone else to operate the business in return for a share of the profit) then consider the stock market.

Exodi

emmat1707 said:

I have been thinking about buying a property and letting it out would this be the best option

Do you have any experience letting properties or have you done extensive research on the processes, yield/cost analysis, etc? Have you planned a contingency for expensive repairs, void periods, potential non-payment of rent and eviction costs, etc?

Oftentimes the people who naively think being a landlord is an easy way to print money, are the same people later complaining when they are sued for 3x the deposit because they they didn't realise they were supposed to put the deposit in a DPS, or unable to evict their tenant because they can't serve a compliant notice.

Certainly many (myself included) don't think the reward is worth the risk and would rather take a guaranteed return in savings or invest the money, than take on the responsibilities that come with being a landlord. I expect many current landlords would likely make different decisions if they were able to go back in time. Many landlords are currently throwing in the towel.

And this is before additional strengthening of tenants rights which is increasingly being persued.

How old are you? What is your income? It's worth looking at the whole picture - it could be incredibly beneficial to feed it into your pension + ISA's over a number of years and get tax relief on it, for example.

Roger175

emmat1707 said:

Hi all, 

I am due to inherit around £250k and am unsure of the best way to invest this. I have been thinking about buying a property and letting it out would this be the best option? I currently am lucky enough to have no rent or mortgage. 

Thanks all! 

I would avoid BTL like the plague. We sold ours 2 years ago and are currently helping our son sell his. Getting out was the best thing we ever did.

The tax regime is now bonkers and lots of added red flags being raised by the new Renters Reform Bill.

You will make more on investing the money in a S&S ISA or preferably your pension (due to the boost from the tax relief).

tacpot12

You should look at the alternatives. I have a property I rent out, but I also have a substantial retirement portfolio invested in EFTs and Investment Trusts (About 80% equities and 20% bonds). I'm getting a return of about 6% after charges from the retirement portfolio and about 9.5% from my rental property (rent + capital appreciation). 

While the property rental is substantially better than my investments in equities and bonds, I also have to do more work to generate the extra return, e.g.. keeping up with legislation changes and engaging tradespeople to do work. 

Hoenir

Do you have a decent pension pot ? 

jimexbox

Max pension contributions, drop £250k over the next however many years, you'll be investing £312,500 with tax relief. More if you're a higher rate taxpayer. Then retire early.  

Albermarle

emmat1707 said:

Hi all, 

I am due to inherit around £250k and am unsure of the best way to invest this. I have been thinking about buying a property and letting it out would this be the best option? I currently am lucky enough to have no rent or mortgage. 

Thanks all! 

You really need to supply more info about yourself and what you want to get from the money.
For example if you went to a financial advisor, they would not offer you any advice without first asking you lots and lots of questions about every aspect of your life.
Basically how you should deal with £250K, how I would deal with it and how Joe Bloggs would, could well be completely different.