To wonder what is the best use of this inheritance.

[PandoraRocks]

Posting here for traffic.
I am mid 50's, have a non live in partner who has been future faking me for years so decided I just have to get on with my plans.

Mum died 3 years ago and I live in her unrenovated house which is mortgage free. It has a very large plot in front, sufficient to build another house.
I have 102k in inheritance. I also have another house on a buy to let interest only mortgage which is 71k. It has 6 years before repayment due and the current mortgage ends in 2 years. I have 2.5k left on my car loan.

I am self employed (retail) and own my commercial property outright. Just restarted work and have no idea how bad the recession will be. I am going to take out a bounce back loan for 8k.
I estimate my house needs at least 35k of renovation to make it comfortable ( currently have no central heating/hot water, downstairs loo only, 40 year old kitchen etc). I manage - I have a shower/kettle for hot water and basically live in one room. However, I am getting tired of living like this and was all for renovating in earnest. I have already painted the outside of the house which was bare render and am about to have the windows replaced - 4.5k - and a lean to demolished and rebuilt as a utility - 8k. These things will at least mean the exterior is done before the winter.

My dilemma is this: the house I rent out also needs about 15k spending on it before I can sell it for a good price. The current tenant has caused problems with damp and mold because she never opens windows or uses extractor fans and has heating on too high. She is always late with rent. To be honest, I would like to evict her so I could sell or Airbnb the property.

So my options are: 1.Carry on renovating the house I live in. 2. Pay off the mortgage on the Buy to let and get that up to standard to sell or holiday let. This would mean having to wait before completing the renovation of my house and only doing those things above to secure the exterior.
I did also have thoughts of possibly building on the plot or erecting an Airbnb cabin or something.

I realize I am very fortunate in having so many choices, but I don't want to blow the money on the wrong decision. Thanks for reading this far.

Could you sell the building plot with outline pp for another property? That would give you funds to renovate the others and then move on ... either stay put in a newly renovated place, or sell and find somewhere new (and someone new as well).

Do you want to remain living in your mum’s house? If so you need to focus everything around that. Sort it out and consider whether you are willing to live with major disruption whilst another property is built right by it.

Personally I’d consider getting planning for the front of your mum’s house and selling the house with planning. With the proceeds I’d buy somewhere to live which would be mortgage free. Also a developer might consider knocking the whole lot down and starting again.

The car loan is tiny compared to the inheritance
So I’d pay that off just to clear it up. (If Payign it off is actually allowed).

Regarding the buy to let, Id just let that carry on for a bit and see how everything else goes. Then you can make a decision based on that.

I would focus on having somewhere nice to live for the winter. It'll be really miserable otherwise and there's no reason why you should live like that. Do you want to live in your mum's house?

I'd evict that tenant if possible as she's causing damage to the house. I'd do it up and continue renting.

The holiday let idea is interesting but we can't decide because we dont know what your local market is like. Brilliant if you're in Bath or Bournemouth, probably a bit more shite if you're in Bracknell.

The question you've got to ask yourself is where do you want to live? You could sell your mum's entire property to developers, then you don't need to worry about renovating your house or parcelling the land, living next to a building site etc. Might be a bit sad to see her house be demolished though. It would give you a cash injection to turf out your tenant and do up your rental, and allow you to find a place of your own.

What's your pension situation like? Do you have sufficient put away for retirement? If not, sell the building plot, turf out your tenant and do that place up, move in there whilst you do up your mum's place to your spec. Chuck anything left over into investments, maybe try to snap up some repos in the coming crash.

Damp and mould would not be a problem if the house was well-insulated (and how would you know she never does X if you don't live with her?!). I am fed up of tenants being blamed for the poor state of housing in this country. People think it's normal. Well it may be currently, but it doesn't have to be. Passivhauses don't go mouldy.

I would do up your house. And do up the other house and then sell it. Find a way to stop driving so you won't need the car. Don't build/get planning permission for another house, but plant an edible forest garden on the land instead (free low-maintenance food and good for the environment). Don't take out a loan.

I don't understand why you are having to make choices when you have £102k? That is plenty for all those things you've costed. Surely you can just pay off the mortgage with the money you get from the house sale (and presumably have some left over)?

I don't understand why you are having to make choices when you have £102k? That is plenty for all those things you've costed. Surely you can just pay off the mortgage with the money you get from the house sale (and presumably have some left over)?

This completely.

It sounds like you can do everything with the money. Renovate both houses but do so keeping in mind a strict budget, if selling the rental I'd keep to a 10k budget.

Whats left over either 1) put towards the interest free mortgage along with any savings you make from rent/air bnb over the next 6 years to pay it off or 2) sell it after reno and bank the money. Or do both. Rent it out first for however long then sell. Personally I'd sell it on retirement or keep it for retirement income.

Car loan is nothing in the scheme of things, pay it off early, if you will save interest or just carry on paying it as normal.

Speak to an professional IFA, OP and make your decisions based on those discussions.

Whatever you do, don't let your "future faker" partner suddenly great interested in you, especially now your financial circumstances have so improved. Keep your non live-in status and maintain your independence.

Pay off car loan, tomorrow. Why people buy depreciating items on loans is beyond me, you're buying a liability then adding a liability on top!

Buy a copy of Rich Dad Poor Dad from circa 1998

Prioritise renovating your own home over the rental, particularly heating, joinery, kitchen and family room. You won't lose money on those things when you sell so just get them done.

Talk to your tenant about her habits. Explore better insulation for that home but keep tenant in place.

Aim to sell both properties once tenant gives notice. Trade up at that point. Prioritise location, location, location.

Get proper investment advice please.

The overwhelming majority of advice you'll receive on here is "invest in bricks and mortar, it's the safest bet". That's not true investment advice, that's an opinion based on limited experience and narrow field of view of investment types.

Of course you need somewhere permanent for you to live. But beyond that have a look at everything, take balanced advice etc.

Definitely get professional financial advice for this.

Hope you've ditched the guy.

Slow down your plans...you don't need to make all of those decisions now.

Firstly, do not get the £8k loan as the interest will bleed from your inheritance and it might not be viable if you don't understand the state of the current market.

Secondly, pay off your car loan.

Thirdly, continue with the external renovations as the house needs to be weather-proof.

Over the next month, start eviction proceedings and costing for improvement on the rental. Get that done before winter. The market might not be ideal for sellers so wait a bit, but make sure the house is ready for sale, rent or holiday let

Then you can spend more time making better decisions about your properties from a secure position.

If you love your mum's house, take time with it. Make it a labour of love rather than a commercial enterprise. The commercial house will fund that.

Where do you want to live? If you'll be happy where you are with the renovations done, do that. It will improve the overall quality of your life!

If not, work out whether you'll be better off selling it as a doer-upper or bringing it up to standard and getting more for it, take whichever option is best in financial terms, sell it and buy the sort of home you want to live in.

I wouldn't sell the BTL property. Rents seem to be rising inexorably where I am (south east) and it's likely to give you a decent income for years to come. But it does need to be repaired, damp sorted, etc. It's unethical to rent a property that is damp etc, imo. If your tenant is a pain in the arse, serve notice and renovate while empty. Then you'll be able to get a better income from it when you re-let and it's all in good nick. If you don't need the rental income to live on atm, use it to pay down the mortgage if you can repay in chunks or put it in the best interest-paying account you can find and save up to pay off the mortgage.

Bear in mind that house prices are widely predicted to take a hit because of the post-Covid economic fallout. My feeling is that this may not be a good time to sell a property unless you need to.

Look at your pension provision. Check if you'll qualify for full state pension when you reach state retirement age (you can do this online). If you won't, you may want to make up your national insurance contributions so that you do. Do you have a private pension? You might want to consider putting some money into a pension, although annuity rates are brutally low.

Oh, and if you don't want the big garden, get outline PP for building a house (or even a pair of semis) and sell part of the land as a building plot.

Could you not sell your Mum's property and the plot as separate sales? Then buy somewhere perfect with decent amenities, then do up your potential air b n b?

Thanks for the advice.
I had planned to do up my house and live in it for at least 5 years before getting planning on the front plot and selling the lot together. I don't want to live here with neighbours in front.

Whatever happens I will be evicting the tenant as she has never paid me the full rent and has damaged the house through condensation. She never uses extractor fans in bathroom/ kitchen and never opens windows. The garden is also a jungle now.

I agree 102k is plenty to reno both houses but not enough to pay off the mortgage on the rental as well.
That is my dilemma. I will only have a state pension and wanted to keep a rental for future income.

If I renovate both houses for 50k, that would leave me 52k in savings. If I then sold the rental for 125k I could pay off the mortgage of 71k. This would leave 54k. So I would have 106k minus capital gains tax and minus car repayment. So less than 100k to buy another rental. I would not get a 3 bed semi for that (which is my current rental ). I would be downsizing, exchanging a 3 bed semi for a terrace in effect. I have noticed property has really risen in the past year in my town (rural South Wales).

I don't know which option to go for - to pay off the mortgage on the rental now, get the house fixed and rent it out again. Just spend 12k on my house and leave the rest till I can save more money or fix both houses and try and save about 20k to add to my remaining savings so I can pay off the mortgage in 6 years. I think SUMMER's advice is reasonable.

So less than 100k to buy another rental. I would not get a 3 bed semi for that (which is my current rental ).

May be worth reading up on the concept of leverage. Interest rates are negligible so loan servicing is easier than it used to be. You need equity value in one house for the deposit on the other. So your 125k rental with a mortgage of 71k gives you equity of 54k. At 20 percent down you can buy a property worth 270k (assuming you can service it, which you can, if you set rent appropriately).

Leverage

You may find that the appeal of your mum's house is that it has a large, vacant plot in front and it won't sell as easily/so well without it.

Move back into your old house, get outline planning for plot, sell your mums house as it is, plus the plot of land when u have planning.

You can get a Government grant to get an air source heat pump installed. It runs on electricity & also provides hot water. Takes 1 to 2 days to be installed. They do a survey & estimate the costs before installation. Costs 10-20k depending on size. Some forms offer cash back over time too, as part of the deal.

I would get this installed first, so that you can live more comfortably & it will make it more appealing to buyers

Why is your tenant not paying full rent ?
You can sell with tenant in situ

Have you considered selling both at auction, with a reserve price ?

You have a lot going on

A self employed business to run

A tenant who is not paying full rent.
Why don't you get an agency to manage this. It costs money, but they would chase the rent & do inspections etc

It would leave you time to get heating & planning permission on your DM property. Do you think that a builder would knock the existing property down & build several new builds ? Get 3 valuations before you do any improvements

You need to work out what you want to prioritize

Also where to spend your inheritance wisely

Good luck