Inherited a moderate amount of money

[RubbishMantra]

OK, DH died a while ago. The money I inherited is moderate, enough to buy a house to let, outright. We bought our home together, went halves on it - no mortgage.

I'm only just starting to think clearly after the horror of losing him.

Is property to let the way to go? And using any excess capital to invest in stocks/shares/ISAs? Or will a financial adviser attempt to dissuade me from buying a rent to let property, as they will not gain as much as their annual fee of investing in solely stocks/shares? I have just stuck the money in a savings account for now.


Thank you for reading.

[RubbishMantra]

*... rent to let - I meant buy to let.

[FanSpamTastic]

Over time property has done as well as, if not better, than shares. But it is obviously tied up in one lump asset. So if you have a period where you have no tenant - this means no income. Also houses need repairs, updates etc. Would you be able to afford to pay for repairs or last for a period with no tenant?

Also if you needed to get access to cash then shares are easier to liquidate than a house.

You don't need a financial adviser to buy and sell shares. You can set up an account with a broker like Hargreaves Lansdown and buy a portfolio. You pay cash into your HL account then use it to buy shares. You can start with just small amounts and then build up. A portfolio will spread risk.

[1DAD2KIDS]

Even if the cash returns aren't as juicy you have the security of an extra set of bricks and mortar. That's the way I see it. Of course being a landlord has its down sides and is not always for the faint hearted.

You say modest? Another of a deposit on a buy to let mortgage or enough to buy outright. This would have a huge bearing on my decision

[1DAD2KIDS]

Sorry just read the outright bit. Personally I would go with the rental

[BerylStreep]

Rubbish, I remember your thread last year and just wanted to add my condolences.

The thing about property is that there is now 3% stamp duty for buy to let, so it might still be worthwhile, but need to bear it in mind.

There is also the potential that property prices will go down with brexit.

We have invested with global equities, which has meant we're not as reliant on sterling.

[Note3]

Sorry to hear about your DH. A close family member went through this loss and I'm not surprised to hear it's taking you a while to think about stuff like this.

Although long term property is usually good for investment, equally becoming a landlord is not as straightforward as it once once. I hang out a lot on the house section of the Martin Lewis forum and have seen ppl ask the same question as yours. The responses are lengthy detailing the many considerations and pitfalls. I used to intend to become a landlord when I accumulated some money...having read the info there I can honestly say I think I will look to invest elsewhere. You may read all the info and decide it's still for you but make sure you spend time researching it.

[1DAD2KIDS]

I am not convinced by the Brexit argument in terms of property. Brexit will have little affect on the supply and demand issue driving high property prices and high rental returns.

I would however be cautious about investing in the stock market as the global markets are very unstable at the moment. You could really get your fingers burnt.

[LyndaNotLinda]

Firstly, I'm very sorry for your loss

I think property would be a sound investment but I would talk to a financial advisor about how much to put in and how much to keep liquid. It may be more tax efficient to keep a small mortgage on the house and you will of course need money to pay for repairs etc.

Will you need any cash flow other than your own earnings to pay for you/your children now and into the future? Contingency funds?

It would be really worth talking to someone

[1DAD2KIDS]

Sadly the mortgage tax the government is slowly phasing out mortgage interest tax relief. I can't see how it would be tax efficient

[RubbishMantra]

Thank you for all your replies, and advice.

I'd have enough to buy a 2 bed property (no mortgage), and still enough contingency for maintenance, rent free months. The area I live in is quite pricey, and rental flats get snapped up very quickly - like within the week. But... that indicates it's harder to get on the property ladder, so I could have problems selling if need be.

Bloody Brexit!

I'll have a gander at the money forums, and make an appoinment with a financial advisor.

DH and I didn't have DCs, he died very young.

[RubbishMantra]

2 bed houses don't stay on the market for long either, between a week and a month or 2 (if overpriced), unless they're at the higher end of the market. But as many of you have pointed out, we're in shaky ground with Brexit.

I may be better off (for now) to put it into a high savings account... Sorry, just kind of thinking out loud here.

Thank you for the condolences, I remember you Beryl, you post on the Litter Tray? Which is where I mostly post.

[Kaelle]

Good idea to see an advisor so you can get a good overall picture and make the right choice. Savings accounts are pants once you've got enough in them for emergencies. Others have talked about the downsides of being a landlord, but from a financial point of view in addition to what others have pointed out, the government gives you £11k of annual capital gains free of tax. You cannot use this if you invest in property because it's a use it or lose it allowance. When you sell your property you'd only get £11k of the gain free of tax, no matter how long you'd held the property. If you're in the market, well invested according to your appetite for risk, you can use that allowance annually by simply selling, realising your tax free gains and buying again. As for an advisor, I have one and think it's incredibly good value. Ringing me up to remind me to sell is of HUGE value!

[RubbishMantra]

Kaille, do you have the opinion it's better to invest in property or shares?

And if I were to buy to buy property, I should buy and sell within the tax year?

Am a bit , but thank you for your advice.

I think I need to employ the services of a financial advisor.

[Kaelle]

Well with stamp duty as high as it is, you have high costs to buy and high costs to sell. I doubt you would make an 11K gain in your first year...! Plus you'll have agents and solicitors fees when you buy and sell, too. As a landlord you also have unexpected costs such as maintenance, repairs and the dreaded potential vacancy! I would invest in a fund or a portfolio of funds where your risk is spread over all categories of assets (equities, bonds, and even including property in some cases), and yes, do it with a financial advisor. Usually they take their fees off the top or you pay a fee for their time. Give yourself a good five year horizon and tell your advisor you want to cash in your gains once they've reached the tax free allowance and then you reinvest in a slightly different fund. Let me know how it goes!

[FurbysMakeSexNoises]

Hi Rubbish I'm no financial expert. I inherited some money like you when I didn't want to . Having looked into various options I think the prevailing advice would be to do a bit of both, thereby spreading the risk. Most property experts keep theirs as interest only mortgage but most mortals don't like that idea as we are risk averse.

The bottom line for me would be - can you emotionally handle all the potential upsets of being a landlord? It's a huge job and lots of potential pitfalls. If you aren't feeling robust yet then maybe invest the money through spreading it into a variety of funds etc and review it in five years?

[SleepingTiger]

With shares, investment trusts etc you have liquidity. You do not have that with a let property. People like property because they can see it. Shares etc they cannot see even though evidence of the benefits of the stock market are reflected in 90% plus of our bank account expenditure every month.