What to Invest in?

Bostonerimus1

I would avoid tying up money in rentals. To be a good landlord takes commitment and the returns are far from guaranteed. Becoming a landlord involves a lot of planning; essentially you need to write a business plan where you detail all the costs and money flows and also understand the tax and legal implications. 

So do the simple things of personal finance first.
Do a budget so you can see where to save.

I'd put 6 months spending in the bank or maybe a cash ISA for emergencies.

Then pay off any high interest debt you have.

When that is done your priority should be tax advantages accounts, ie workplace pensions, ISAs and SIPPs. if you don't have a workplace pension open a SIPP and use your full ISA allowance. To understand how you should invest your money inside your pensions, ISAs etc educate yourself about investment funds..I'd recommend balanced funds or index tracker funds with asset allocations appropriate for your goals.

PoGee

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 inherited around £120k 3-4 years ago and bought a rental - 2nd rental. It's a great flat and had a good tenant. It was let out through a letting agent and was happy to pay the 10% letting agent fee as he took care of all headaches - I just had to authorise repairs as they came up. Spent around 10k on legal fees, ADS and getting it up to spec for landlord regulations. What made me sell up was (1) my son wanted a place to live in (2) constant change in regulations re being a landlord.

Had my son not wanted it, I'd have been happy to continue to rent it out as it would have been a nice top up to my pension, had I taken it now.

Remember you'll need to pay additional dwelling tax (not sure what English version is called). By the time I sold it, I'd made a loss when taking the 10k spent, into consideration + valuation wasn't too good.

UKX69

My son and daughter in law had a BTL for a number of years and the last tenant was a nightmare. In the end they had to get him evicted and the damage to the property was substantial. They were so fed up they put it on the market recently and was snapped up in a few weeks. Instant Karma!

fcjf

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. 

I’d echo the other comments about needing more information on your circumstances to make specific comments but as a landlord of 22 years with 15 properties (10 shared ownership with a friend) who inherited just under 300K earlier this year I’ll let you know what I did with it.

I maxed out ISA’s for myself and my wife for last tax year, this tax year and put aside 40K for next tax year. I’m maxing out my salary sacrifice contributions for my work DC pension, I’ll also max out SIPP contributions for myself and my wife. I put some into a GIA, some into 1 or 2 year fixed interest savings accounts and then have a fair bit still in easy access savings accounts. I’m still debating the merits of using some of the cash to pay down some BTL mortgage balances where the LTV or int rate is higher than I’d like.

What I didn’t do was buy more rental properties. The last property I bought was in 2008 and since then tax regimes and legislation has changed and the perennial problem of dealing with tenants never changes. I’d do it again if times were like 2003 but they’re not.

If you’ve got investments, pensions, home etc covered and property investing is something you have an interest in and want to do as a business there’s loads of learning material out there but it’s not a buy and forget, easy money investment some make out (usually by those selling their services).