What would you do with this amount of money in these circumstances?

[JulietBravoJuliet]

Current situation: single parent, two part time jobs totalling 21 hours, looking for more work but currently claiming some housing benefit and tax credits. Also recovering from a brain injury so limited to just how much I can physically work, but this will hopefully improve in the next few months!

Dad is coming into some inheritance - approx. £40k - and has said he wants to give it me for a house deposit, which, at the moment, would be pointless as I'm not earning enough to get a mortgage for the rest (small terraced property round here is around £90k so would need to borrow around £50k).

Now, I know if he gives me the money, I lose my benefits which is fair enough, but I'd prefer it to be doing something for me, other than just paying my rent each month until it's all gone. My friend, who's a builder, suggested buying a repossessed house to do up and sell. Said he's just renovated one for someone (in a town about 10 miles away) which they bought for £30k, he gutted it; new bathroom, kitchen etc. and they sold it for £90k a few months later. He said he could do a 2 up, 2 down terrace for £10k-£15k providing it doesn't need windows and doors replacing, otherwise add that to the cost. Obviously, if it all went well and within budget, that could make me a nice profit.

Other option is to put it towards a buy to let. Again, these come up dirt cheap sometimes and would bring in a monthly income, although I'm aware that there are lots of other costs involved and I'm not sure how I feel about being a landlord.

Another friend has a few holiday chalets on the coast. Each of these, after ground rent, insurance etc, makes him £3k a year, and he has no trouble filling them over the holiday season. He has suggested buying some of these on the site he's on and getting an income that way. Not sure about this as I know they lose a lot of money once bought.

Whatever I decide to do with it, I either need to turn it into more money towards a house to live in, or I need to make an income to cover some of my rent on where I'm currently living. Alternatively, Dad can keep it and I'll carry on as I am, but I'd prefer to get off housing benefit and do something with this money to better my lifestyle.

So, WWYD?

If your dad is going to look after the cash for you while you recuperate, then he should state in a formal document that the money is intended for you. Do you have siblings or other relations who could lay a claim on the money?

Concentrate on getting better & then improving your career prospects.

Get some advice regarding your benefits & income.

www.moneysavingexpert.com/family/

www.hmrc.gov.uk/individuals/index.shtml

Buy the house and rent a room out to a lodger for £4.5k tax free income.

www.gov.uk/rent-room-in-your-home/the-rent-a-room-scheme

Speak to a mortgage broker, they will search the whole market for a mortgage product that suits you. There are many companies who will accept tax credits as income so you don't have to stick with nationwide.
Both times we have organised a mortgage we have done it through London & County. Look at moneysavingexpert...they recommend l&C which is how we found them.

Your father needs to ringfence the cash until it is legally yours by putting it in his will/notarized note that he is leaving the money to you. Too much cash for you to potentially lose if he died suddenly.

Next, he needs to keep it in an easy access account earning best interest possible. Moneysavingsexpert is best place for advice. Currently he could earn 3% on the first 20k if he opened the santander 123 current a/c. Then 1.5% in the next best easy access account for the rest.

Oriunda there's no one else the money could go to; I'm an only child and my family consists of dad then me then my 8yo ds, plus a cousin from my late mum's side. Dad's will is up to date and states that his entire estate goes to me. Even with this money, it will still be just under the inheritance tax threshold so I'm not worried about that.

I will certainly look into mortgage options when the time comes. By the time the solicitor has finished doing whatever they are doing with the money, I could well be fighting fit and have another job anyway!

You need to buy the right sort of doer-upper
Dated, run down, overgrown yard, but structurally sound and with a usable (although hideous) kitchen & bathroom
That way you can pay a low price and do it up gradually as funds allow

And live in it while you do so, over 5 years or so

I think you need to get some financial advice. You will (I think) have to pay inheritance tax on it, if your Dad dies within 7 yrs. So if he is in poor health already, it's in your interests to get in with it.
I'd take Madonna's advice but your situation re benefits is tricky.

Inheritance tax will only be applicable if the estate is worth more than 325k and the OP said even with this money that won't apply.

if your late mothers inheritance tax allowance was not used when she died ( provided they were married ) it will be 650K altogether

Inheritance tax won't be an issue, even with this money. His house is worth about £150k, savings at the minute about £50k plus his private pension, car (£10k ish) and this money that's on it's way, so well under the threshold. He looked into all this last year when he had an op as he wanted to make sure everything was in order if anything happened.