£200,000

[SplashingAroundTown]

Bit of context, I have £200,000 inheritance and would like to use it to set up some sort of passive income. Ideally buying a flat outright to rent out but I wondered if anyone had any other genius off the wall ideas?

I have a small mortgage so don’t really need to use the capital to pay it off - much mor interested in a long term investment that will provide an income.

AIBU to ask? Hope not!

jazzmin love it. Wise advice - but I do need to maximise my return too. But love the idea of buying somewhere for the next generation to love

It’s ok kumquat I’m not going to rush out and do something silly without advice first. But sometimes people have suggestions I might not have thought of.

BTLs are a big job. If you give to a management company it eats into your income.

And what happens if you get a non-paying tenant. It’s very long process to get them out legally.

Thanks all. Lots of food for thought!

I have been a landlord before and I’ve had (mainly) good tenants. I don’t think I’d be up for holiday lets because that’s quite full on in terms of maintenance and turn around etc.

I recently rented a very normal family home on air B&B and couldn’t quite believe how expensive it was (and how much the owners were making every weekend they rented it out!)

Ok @babybrain77, OP should ignore all the financial advice, smartarse! (I mean that in a friendly manner, for the avoidance of doubt!)

@crimson72

The OP has £200,000 to invest, is that right? So how can she possibly make £47k per year without touching the capital? Am I missing something here? confused

After 30 years, if she adds £100/month with compounding interest at 5%, her capital will be roughly £950k. The interest will then be about £47k a year (5% of £950k). That's without touching the capital--but only 30 years on. My other numbers were playing with that compound interest calculator.

Ahh the BTL, stabbing young people in the back and trapping them into renting for life

*NameChanger22

I'm not sure I'd trust an independent financial advisor. How 'independent' are they really?*

There are very strict rules on this now. Independent financial advisers aren’t allowed to accept commission or any inducements from companies to get them to recommend their products to you. They can’t even accept a free lunch.

The other kind of advisers are tied advisers who can only recommend products sold by the bank or insurance company who employs them. Tied advisers have to make it very clear they aren’t independent though, and you’ll have to sign documents saying that you know they are tied.

Bit harsh grey
I was a good landlord.

Get a pension forecast, state and private/work ones if you have them. If any gaps or it looks not enough pay extra in, the government rewards pension savings. Put 3 months wages/expenses in a savings account or cash isa for rainy day and forget it. Keep some for a new car, boiler breaking down, roof repairs..
Have a little holiday or buy a treat for yourself.
See a financial advisor,spread your money out, bonds are safe but not exciting, investment the reverse.
who knows what is happening with property during brexit, I'd wait and see. Yes immoral to buy to let in this climate, but holiday lets and student accom are needed and can be fully managed. Air bnb is a pain to the neighbours if you are not on site, many horror stories.

Well you should get advice but if I were you I would look at buying up north. You can buy a lovely terrace in chesterfield/Barnsley for 60-70k and get 450 a month. If you use an agent you wouldn’t hardly have to visit and would still get a good return. I have rentals too and yes they require maintenance but it’s still worth it in my opinion.

How is letting property knifing young people in the back? It's providing much needed homes, very often for young people, couples and singles. Sometimes they only stay two to three years until work takes them elsewhere or buying their own home is on the cards.

We had no problem letting our flats at reasonable rent and the agent, who takes a small monthly commission, organises any repairs or new washing machine if needed. We don't have to do anything. They've all gone up in value since we bought them too. They're nice places to live, safe, modern, two bed, two bath and car park. One has a garage.

Funding circles are good to invest in.

spread it out, use 50k as deposits on 4 BTL mortages then you 4 x rent, buy in Chatham/Rochester area close to London to commute and a 2/3 bed terrace will be 200k we started off with 4 and now have 9

Yeah, why take one house you don’t intend to live in off the market when you can take 4? And hey, that’ll push the prices up for local residents too, yay!!

Independent Financial Advisor - get a recommendation from someone you know. Or have free appointments/meetings with at least 2/3.

You need to invest for the long term if you don't hit retirement age for 30 ish years.

Good time to invest right now as markets are down currently.

It doesn't matter if your property does lose value, it will go up again.
Bricks and mortar is still the safest option for long term gain.
It's my pension sorted without having any risk at all.
i can sell if market is booming or continue taking the rent for an income.
I don't know a pension scheme that can offer completely risk free

It's my pension sorted without having any risk at all.

The 10 Major Risks of Real Estate Investing

That's very interesting *MissConduct" , luckily we did manage most of those including the no mortgage, and the areas are good for cheap first homes.

Rebecca it's true there always will be need for private renting, in Europe it's much more common, but they have different expectations. There also should be more social housing.
The problem in U.K. us that people are not satisfied with capital gain, they want profit too. This makes rents expensive, causes hardship to renters on low income, there is no security, terrible for families and vulnerable people. Often poor repair with consequences for health, and bad for people who are trying to save a deposit.
It also puts prices up and makes housing in short supply, your profit is someone else's pain. There are a few landlords who treat tenants well and charge reasonable rents, but there are some real rogues and crooks in the game

Well they need to be regulated. Our flats are not expensive to rent, especially for a couple, and we still receive a decent income from them. Plus they can be sold in the future. Many people start off in rented accommodation and it's easier for those who may be moving on in a year or two. For example, one flat has recently been let to a young doctor who is on rotation in Norwich; he won't be there forever. He was really glad to find such a nice place at a reasonable rent.

I'm not a financial advisor so I can't give you any advice. I can tell you what I would do.

I would spend £20k on cryptocurrency, split between bitcoin, Litecoin and Dogecoin.

£20k on gold, probably in sovereigns for easy transportation individually.

£20k each on Euro and Dollars.

My reasoning for this is the £ is going to tank post a no deal Brexit, and these hedge you against that crash.

If I had a small mortgage like you I'd pay it off.

But I haven't, I'm no fixed abode, so I would put down a deposit to rent a place and make sure there's a direct debit in place to pay my rent and other bills.

Whatever you do, I wish you the best.

I'm a LL. I've made money because I stick to an area I know well and built or rebuilt the homes I rent out. I have a team available to me because over the years I've worked hard to build good relationships.

Truth is being a LL is work. Managing tenants is work. For £200k invest it, as much as possible in tax favored accounts (ISA etc). Invest in low fee ETFs (3-4 so you are diversified) and keep adding to it.

Do speak with an IFA. A good one will walk you through your options after going through your current financial condition.

I meant to say earlier - congratulations on your inheritance! It's a tidy sum, good for you.

Please take what's here with a pinch of salt. If it was that easy to make money there would be a lot more rich people in the world. All these things involve risk, especially with property. You need to fully understand what the risks mean before you even start to think about what you could gain.