Financial Advice

stumac1980

Hello group,

I am after some advice, I currently have a 2nd property that is lying empty and i have 2 different thoughts about what to do with it. Firstly is to rent the property out and create a passive income for the foreseeable future, However I am worried about the people that I get into the property and any damage that they create and leave.

Currently I am personally going through some ongoing health issues that are not going to go away and this will have an impact on what I can do to the property when needed.

The second idea is to sell the property which roughly has a value of £200k and then use this money along with some other money that I have saved roughly £60k.

How would I go about investing this money to make a return each month or make the money grow so that it will be helpful in the future and towards my pension.

Any help or advice on the above or where I should go to make the investment work for me.

46year old male, with no mortgage on his property

Brie

You might want to ask about having rental property on the houses forum - there seems to be a number of experienced landlords there that warn people about what a difficult task it is what with all the regulations and some people random habits when it comes to paying rent.

House buying, renting & selling — MoneySavingExpert Forum

As for actually investing - you might put everything into a tracker fund of some sort. There's bound to be someone here that knows a few good ones. But you might help out by saying a bit about what you already have in investments, pensions etc. Your comfortable level of risk. Whether you are working, tax bracket.

eskbanker

In general there's little enthusiasm on this board for investing in property to rent out - as well as being committed to an illiquid asset, the tax advantages aren't anything like as lucrative as they used to be and people underestimate the hassle of being a landlord.

Conventional investing, whether within a pension, ISA or elsewhere, is likely to be a suitable alternative, but having liquid savings is also important, so keeping some for short-term use, in the form of an emergency fund and to cover anything else likely to be needed within a few years, is typically recommended, and then for the rest you'd need to consider when you'd need access to it in order to inform a split between pension and more accessible investment.

What sort of monthly income do you need, over and above your existing income from employment or wherever else?

P.S. Re your thread title and opening line, posters on here can offer thoughts, guidance, etc, but in the literal sense financial advice is a regulated activity - you can engage a financial advisor (preferably an independent one) to do this for you.

Stubod

..sell it and invest the proceeds…you really don't want to be a single property landlord……IMHO

Albermarle

https://forums.moneysavingexpert.com/discussion/6686892/financial-advice

How would I go about investing this money to make a return each month or make the money grow so that it will be helpful in the future and towards my pension.

Well first you need to decide what your objectives for the money are. For example if you plan to make large purchases/expenditure in the next 5 years, you would be better keeping that portion in cash savings. Or if you want to save more for retirement, adding more to your pension is usually the best way due to the tax benefits. How much you can add depends on your earnings/job ( which you do not mention ). Also you do not give any indication of the rest of your finances, whether you are married, have children etc. Everybody's situation is different so there is no simple answer to your question.

p00hsticks

Bear in mind that depending on how long this property has been empty and whereabouts in the country you are, you'll be finding it expensive to just keep empty if you aren't already - there may be empty ./ second home council tax surcharges and unoccupied property insurance is generally both more expensive and has more restrictions.

So you really need to make a decision to either get it on the market or get a tenant in ASAP - in your shoes I'd go for the former.

gm0

The market in 2026 and recent legislation is not friendly to the single property amateur landord.

With health problems it sounds most unwise to attempt this on a muddle through basis.

Financial investments are much less hassle to operate.

If you believe there is a long term capital appreciation to be had on this property because it is unique or its location is particularly favourable. Then you might keep it and pay a carefully selected full service agent.
If it is not really that special and one of many. A clear price (to sell or rent). That argument holds less water.

Financial route

After costs to sell you can look at what is left (net dressing for sale, conveyancing, estate agent fees). That "cash" can be invested.

Normally guidance on this would fall into two pieces:

1) ISA. Stocks and Shares ISA specifically.

You can invest up to the limit 20k per person (x2 if couple) per tax year. So it can take time to get it into the tax sheltered growth account (ISA). Growth inside is tax free. Growth outside isn't. Taxed - Income and CGT subject to some detailed lore.

2) Pension. Pensionable employment income dependent. You can if you have income - push more money into your pension up to the limit of income or the "annual allowance limit" whichever constrains. And if you don't have income you cannot. The house proceeds are not income for this purpose. If you have no income then everyone gets a £2880 per year (3600 grossed up by tax relief as it hits the pension) annually with zero income requirement. Short term deposit rates are not terrible just now while feeding into an ISA and pension. But obviously the future of them and of inflation is a big unknown. And as one person it takes a long time to shelter towards 200k.

You will need to decide what to invest in. And with what long term intent.

You can invest the money in the stock market however you like. Many people start by looking at large global index funds from mainstream providers. Or multi-asset funds which mix equities with other things, bonds, and others.

Here are two extremes to illustrate the point:

Example route 1 - Pension and ISA global market investing for the long term

How much risk you chose to take over how long term a time horizon. And whether you will spend the "pot" down (alongside the returns). Before age 57 from the ISA, after from the pension. Adhoc withdrawals at point of need or built into an income plan.

ISA investment savings withdrawals are not taxed as income. Yet savings are disqualifying for mean tested anything. Subject to IHT and any other wealth taxes as may be dreamed of in the future.

You can invest in any mix of equities and other types of assets - that you choose. But you have to choose. And bear the consequences as the market dictates.

If you view this as long term income source (with inflation protection) then it needs investing in a way (and at some considerable investment risk taking) so as to - over the long term - probably generate inflation plus an amount left over taken as income. So it can continue to serve this need for you for decades to come. The capital is still there. Net what you took out according to need. Nobody knows what will happen. The capital invested might drop 60% and take 10 years to recover. Next month. But if past markets are a guide - in the very long term - you will achieve a decent "average" return. (The wobbly stock market chart for last century and this which wildly swings but tilts up overall). If you can tolerate "variable" amounts of income. So much the better. And can hold on. This may suit you. It requires you to be comfortable with the media noise around investing and to develop a studied disinterest to daily hype and world ending predictions.

The key advantage over being a landlord is it is "low maintenance". It makes few demands of you once setup.

Example route 2 - probably still in an ISA - index linked gilt ladder - investment protected savings offering no upside, but inflation protection of a sort.

This is at the other extreme of risk taking - if you wanted you could create a ladder of inflation protected income. Using all the money and adjusting the "amount" (per year) and the length of said ladder (number of years).

There is not much risk (around an "investment" in UK government index linked gilts. UK government default or changing the rules of the game. The "cost" and income and inflation promise - is set when you set it up.
The gilts run down, the cash falls out (with its inflation added on). The tiny yield spits out each year while they run. You consume the capital over the years and when the ladder finishes - it's over. You can sell the gilts if you change your plans along the way. But that will be "the price" in the market then. Whether good or bad. The timing may be opportune - or not. That varies with what happens in the UK economy and interest rates. If you just climb the ladder of redemption. You don't care about any of that. It doesn't affect your cashflow. Only matters if you sell Income is inflation protected (to specific rules). The cost is known today. There is no investing uplift. But you KNOW that income (with CPI added on) is going to drop in year 1,2,3,4,5. For some people that's what they need or prefer. For some people it's what "using that capital for income" and protecting it partially from inflation erosion means. For a whole range of other people Route 1 would describe it better.

I put these out there as examples. At the extremes. You can blend - to taste - some "known" income. Some "invested for growth" and probably more income but with a risk of a period of "losses" to carry.

Or you employ an adviser to help you invest a bit under 200k the way you want. To meet the balance of greed and fear and future essential and desired income top up as applies to you and your overall financial and family situation

We cannot possibly guide you as to what to do.

With an Independent - THIS IS CRITICAL. A one off piece of advice to help you work it out and set that up for you will cost a few thousand. But your choice is to pay it. Or to self-educate and not pay it - then hit and hope DIY. I'd personally avoid legal firm tied options (conveyance linked), wealth management SJP, Quilter etc. the FA sector. Same regulated help. More expensive. Nicer brochures. Restricted range of product.

In either case DIY or advised - you need to think hard about what this can do for your life. Around "essentials and basics" vs "discretionary" income. The adviser can only help you if you can articulate what you "need" it to do and "would like it to do" in the fact find. So the requirement to think it through remains much the same. Advisers do this for consumers all the time so can tease this out if you struggle to focus on it to the point of a decision you can live with.

Keep_pedalling

How long have you owned this second property? Did you ever live in it, if so for how long? I ask because there is a potential CGT liability on it.

Bostonerimus1

https://forums.moneysavingexpert.com/discussion/comment/82169967#Comment_82169967

I would prefer to be a single property landlord than to own many properties and either manage them myself or employ a management company to do it for me. IMO owning a rental property should only be considered after there's a solid foundation of ISAs, pensions and general investment accounts. A rental property might then be good as a diversifier and a long term investment with the goal of paying off any mortgage so that the rent can be used for income decoupled from the investment markets.

allegro120

https://forums.moneysavingexpert.com/discussion/6686892/financial-advice

Renting out also involves maintenance and repairs. If I was in this situation I would sell the property and put money into savings accounts or investments.

Heedtheadvice

There is much written there above to make you think, and yes they are suggestions ( certainly not advice ) and there will be (and should be) a variety of responses as there is not one best and only approach. In fact there has not yet been enough information from you ( and this has been touched upon) regarding your personal circumstances to give educated guidance/suggestions

One area again touched upon is to view your whole circumstances ( health and finances), needs and aims, risk tolerence and actual known risks such as future security.

It is widely accepted to view financial circumstances with the following priorities:

Debt reduction as this costs you. Sometimes exceptions, such as where you can get low risk returns greater than debt costs such as a mortgage to buy your own property but this can also be risky.

Start a pension purchase early in life as there are benefits over time and contribution tax perks but do not let the tax tail wag the dog.

Build an easily accessible cash emergency fund for some of life's unexpected downsides or needs. Income loss is a good example and it is often suggested to make that 3 to 6 months equivalent income depending upon the risk of income loss and chance of getting new employment oross of benefits. I suggest covering other more predictable costs ( car change/breakdowns, refurbishments of home etc. with a separate or additional amount. Use insurance to cover disasters.

Do include some of life's nice things if they can be afforded without impacting on the above essentials.

Lastly but probably not exclusively some investment. Consider this a long term project to build up a financial asset from any further excess finances. Consider low cost types, those that do not impact on your time too much, tax advantageous methods ( extra pension contributions, ISA contributions etc: as posted above property currently struggles to meet those aims). It could be that, especially at the start, it is difficult to service all these needs but a cash amount ( such as you seem to have) gets you a couple of rungs up each ladder virtually immediately.

Above all think through the options/suggestions, don't jump if straight away and take independent advice if you need help taking all your circumstances into consideration. Be aware that will cost a bit - find that initial and any continuing costs up front and the impact on the investments if there are some so advised. Initial meetings can help judge who to get advice from. You can alway post on here the advice given for others to comment upon.

DIY decisions can come on later.

When it comez to in estment, many might add that additional pension contributions beat ISA S&S additions, which is generally true because of up front tax breaks but there are pros and cons and attractiveness of both.