If i 'give you' 300,000 Euros.....

[Laquitar]

how would you invest it?

a) The money is still in euros. Would you exchange straight now regarding of buying or not? Is the current rate the best we could get?

b) Would you buy now or wait for prices to fall more? (please bear in mind that this will not be a 'home' for us to live but invesment and rent income).

c) where in london would you buy and what type of property (again bear in mind that is for rental, so not where would you like to live but where would you invest?).

We are most familiar with North london and thinking to buy in area that is cheap now but maybe will increase value in few years (Palmers Green='the new muswell hill'?, Stroud Green='the new Crouch End'?, Kentish town='the new Camden'? What do you think of this? Other suggestions? (any part of london)

Sorry for so many questions and many thanks in advance.

[HerHonesty]

i would exhange now
i would start looking hunting out those who really want/need to sell, keeping a close eye on the auction sector
i would look to buy a one bedroom flat in a premium area in zone 1.

[kentmumtj]

i would think about 2 options

option 1
keep in euros and buy a villa in a popular resort that could be rented out as a holiday home.

There are many deals to be had at the moment across Europe. Property prices are very low.

option 2
exchange and buy a property near a university, always guaranteed a let.

[Laquitar]

Ah, thank you for taking the time to reply.

Her honesty,(nice name)
i was expecting the first and second answer. The third answer, hmmm we were looking in zones 2 and 3 but you have given me food for thought. I am going to look what's happening in zone 1 too.

Kentmumtj,
we have done the opposite. Sold in Europe to buy here because price drops are bigger here , also the euro is stronger at the moment. Tbh we had the type of property you mention but was too much hussle. The villa not so but the studios near Uni were more hassle, repairs and worn and the rent there was very low.
We are thinking more a 'good' appartment in London to be rent to professional single person/couple with long contract and minimum hassle (well, one can always dream )

Thank you both so much.

Any more votes/suggestions?

[kentmumtj]

i do have a house that i currently rent out to dss..........now i know most people steer well clear but so far (fingers crossed) i get my rent paid on time now..few teething problems in the begining as i had to wait for the rent but all up and running now, and as my tenant has small children she plans on being there for years.

perhaps thats another food for thought.

My step mum has a property that she rents out to professionals and its a lot more maintaince than i have to do.

[Laquitar]

That's interesting Kentmumtj.

It is so much easier when you have the same tenants for years!

[Swedes]

The Euro is definitely overvalued against Sterling and due a correction, a fairly substantial one I think.

I would buy a small house in Harpenden and rent it out. It's prime commuting and has excellent schools -- which means there's always a market for rental.

[Swedes]

This is actually £300,000 and therefore a bit over budget, but something like this which would fetch a rent of about £1,200.00 pcm

[Laquitar]

Thank you Swedes

This house looks really good (although not cheap).

I think i have been very narrow minded - only had one idea in my head and that was London, zone 2 or 3, newish appartment. Quite narrowed and specific. But you have all given me other ideas/options with many plus. Thank you.

Keep going

[Swedes]

That linked house is in the same road (within 100m) of Crabtree Infants and Primary School and its closest secondary is this comp secondary that beats a lot of selective independents

[kentmumtj]

would you be able to buy a very plush apartment for £300,000 ???

[HerHonesty]

but techinically speaking, 1200 per month (rent before costs) is not a great return on a 300,000 investment.

[Swedes]

HerHonesty - It's a better yield than deposits or bonds atm and you would really be in it for the capital growth, the rental income would just be an added bonus.

[TDiddy]

On the Euro rate: I have been playing the GBP/EUR exchange rate in order to lock-in hedge Euro asset.

The analysts say that GBP should strenthen against the Euro. However, there is quite a lot of volatility in the excahnge rate at present. Economic data and political events (e.g. the Brown PM crisis) make alot of difference.

An efficient (but a bit technical) way of the locking the rate is to use a "spreadbetting broker" such as IG Index or Etrade. But as I said a bit techical. Allows you to fix the forward exchange rate but only put X% of the cash upfront. Very useful but if you haven't done this before or not into finance get some help. happy to explain further if you need it.

I keep an eye on the rate as it is swinging around and then I "pounce" when I see an extreme move that I like.

[TDiddy]

To answer your question more directly, people tened to buy houses becuse the banks gave then cheap gearing. so small deposit controlled large asset. So a 10k deposit allowed you to buy 100k house. If house went up 10pc in a year then you doubled your 10k investement. But as buy to-let investors now know it works the other way when prices go down i.e. a 10pc drop in house price would wipe out your 10k in the example above. SO gearing increases your risk (loss or gain).

I am not sure that property is the best medium term asset to buy. I think some of the commodities e.g. Oil have better medium term prospects.

And then if you want gearing you on the Oil-price you can do so efficiently using - wait for it- spreadbetting. Makes me sound like a junkie but spreadbetting only means that you are tracking an index. Also there is NO tax whatsoever on spreadbetting returns. I appreciate that it is not everyone's cup of tea.

Alternatively you can buy Oil and other commodities using an instrument called ETFs (exchange traded futures). These are vehicles that invest in track indices designed for transparency and accessibility.

Things that I wouldn't do:
-I wouldn't do buy to let as there is a risk that tax rules might become more punitive

-I wouldn't buy an actively manged fund. Most charge high fees and under perform the FTSE or relevant benchmark.
_

[TDiddy]

whatever you invest in, whether shares, commodities, PEP, I would go for an index or index tracker so that you only need to follow the broad sector rather than getting exposure to specific company. Also index trackers tend to be cheaper and more liquid.

[TDiddy]

-PEP-- ISA

[Swedes]

Trouble with an ISA is you are limited as to the amount you can invest in any one tax year, for example this year it is £7,200. Also you are non resident and therefore unlikely to be eligible for interest free savings such as ISAs -- unless you are employed overseas but taxed in the UK.

I assumed the OP might be coming back to the UK at some point in the coming years and would be looking to use the rental property as a means of locking in some profit before property recovers, which it will v soon.

[TDiddy]

Okay, it sounds like you are planning to come back to the UK for sure?

Then you depending on how certain that is I would either;

1)Buy somewhere between watford and barnet ensuring that you are eligible to get into Watford Grammar schools (boys and girls) QE Barnet (boys) and Henrietta barnet (girls). You can apply to barnet schools from anywher, I think but the Watford ones have an outer catchment area. If you re happy to go private then forget about these restrictions but still good schools in NW london and cheaper than Muswell Hill, I think.

2)If your plans are uncertain and you want a more liquid investment then I would use ETFs or spreadbetting on indices to invest in a mixture of Oil, FTSE, Soft Commodities and Govvie bond. If you think mkts are very low and you want to mimic gearing then you could take say Eur 400k of exposure with the 300k. And initially you could place 200k into a bank account and just put 100k with the broker. I would split with 3 brokers ti minimise the credit risk and get good cover by the FSA. Stick to IG Index, Etrade + 2 other reputable one. More detail available if this if you are interested.

Option 1 has the hassle of looking after tenants. Option 2 is a bit financially technical but very managable remotely (from internet etc). And you will want to login every month to check your investments as if the markets rally like a few weeks ago you might want to convert your money to cash and take your profits. Which is less easy to do with a house.

[TDiddy]

think I killed this one by being boring; sorry !

[HerHonesty]

agree with you swedes on that point. are you looking for investment or somewhere potentially you could live in?

[Swedes]

Tdiddy - Are you a man?

[TDiddy]

now Swedes!

[TDiddy]

Yes, I am the MNer formerly known as ToughDaddy

[Swedes]

LOL I didn't know for sure. It was just something about the way you said 'Okay .....' that seemed very male and erm definite.

[TDiddy]

Interesting little male nuances. I don't think that I am arrogant (he says modestly) but I can feel confident in my view . Really, I am not that bad on the male scale.