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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

Original poster

Sell small property to invest the money instead? Stupid? Dh says its ridiculous and to keep it and it won't get as much.

65 replies

Alpacinoshoohaa · 08/10/2021 19:55

Small property gets about 7 grand a year after taxes etc.

Property worth around 100,00 maybe a little more maybe a little less.
I'm wondering about investing it instead in stocks and shares funds and removing the human aspect of this type of investment. I've spent a lot of money on it in recent years and something always seems to go wrong eg I paid for new doors and there were issues, paid for new windows and also issues.

It's commercial not housing.

I'm thinking about selling and putting some into a sipp and some into stocks and shares isa (drip it in)
Silly idea or sensible?

OP posts:
jimmyhill · 08/10/2021 19:58

I struggle to imagine an investment where you could safely and reliably get a 7% return (though how much of that has to be put by for maintenance etc?)

What about investing the profits from the property and hanging onto the asset for now

PhillMcCann · 08/10/2021 19:59

Silly I think.

Extremely volatile times at the moment, I wouldn't be sinking my entire savings into any stock at present.

I'd keep the house.

Original poster
Alpacinoshoohaa · 08/10/2021 20:01

Index funds roughly work out at 10% a year.
I'm just wondering if I'm missing something.

In an isa it would also be tax free.

OP posts:
Kitfish · 08/10/2021 20:01

Are you deducting the cost of the repairs you make each year from the £7k return? I suspect when you do you'll find the return is a lot lower than £7k.

I recently sold property and invested the money in stocks and shares. Admittedly the stock market has been going through a bull run recently but I have made a LOT more in the stocks and shares than I did in the property and I've been freed from having to pay about £10k per year in repairs, property taxes and maintainance.

Morechocmorechoc · 08/10/2021 20:02

It's very sensible if you know what you're doing. There are some great opportunities however some things in the not too distant future may have huge issues so you could easily go wrong. So if you have experience do it. If you don't, don't!

Kitfish · 08/10/2021 20:04

I recommend you don't try and pick the stocks yourself but go to a good financial advisor. You want a balanced portfolio over a wide range of stocks/funds that reflects your risk profile. I have a very good financial advisor, who I would recommend. DM and I'll give you his contact details.

Original poster
Alpacinoshoohaa · 08/10/2021 20:06

Kitfish, the repairs are not ten grand a year but let's say.. Enough that I've not been able to make money to put somewhere else as it were. The idea was to use the rent to invest but I'm not able too as it's going on the property.

It's also the human aspect. I jump when the tenant says, how high.
Still moans and is unhappy much of the time and I pay for stuff that technically I shouldn't be.

I wonder what I would be loosing out on if I did sell it.

Ie maybe now quite a bit of work has been done maybe I can invest the rent.
But I don't feel ahead if you know what I mean?

OP posts:
Original poster
Alpacinoshoohaa · 08/10/2021 20:07

Would putting it into stocks yield about £500 a month?

OP posts:
FellInLoveWithABanana · 08/10/2021 20:10

I would. If you’re done with the human aspect and want a hassle free investment there are some great accounts.

Obviously you have ISA allowances so it won’t cover your entire £100,000 tax free.

If it helps my returns in a managed S&S isa have been 10%

DotBall · 08/10/2021 20:11

I recommend you don't try and pick the stocks yourself but go to a good financial advisor. You want a balanced portfolio over a wide range of stocks/funds that reflects your risk profile

This - a financial advisor who is also a wealth fund manager if possible. We both have a SIPP and Stocks and Shares ISA that we put regular amounts into and our FA/ Fund Manager is returning 40% over the last three years. This is despite downturns when Boris became PM, the start of the pandemic and recently (markets have been volatile the last few weeks).

ErrolTheDragon · 08/10/2021 20:15

This - a financial advisor who is also a wealth fund manager if possible.

Obviously watch out for the charges. We have a mix of stuff but quite a lot in index trackers.

picklemewalnuts · 08/10/2021 20:17

My husband and son manage their investments using interactive investor. They won't invest in property for just the reasons you mention.

Unless you can add value to a property by working on it yourself, it's rarely a great investment.

MrsWooster · 08/10/2021 20:20

What about the increase in value of the property itself over time?

SvartePetter · 08/10/2021 20:20

Yes, I would do it, also hate the personal side of BTL. I don't have a financial advisor, just ISA with low cost broad index funds.
My only concern would be how to do the move tax efficiently.

PattiPritell · 08/10/2021 20:21

Would putting it into stocks yield about £500 a month?

It could, it could also lose 500 a month.
Stocks go up and down.
If you've spent money on the property can't you put the rent up?
Any costs you can set against tax, are you doing that?

ThinWomansBrain · 08/10/2021 20:22

if it's causing a lot of hassle with repairs and maintenance, may be more trouble than it's worth. Is the £7k after the costof R&M, or before?
And do you have tenants, or need to find some? If it's currently empty, could well depend on how attractive the property is in the current market.

Kitfish · 08/10/2021 20:23

Hi @Alpacinoshoohaa

It sounds like you're making close to zero return on the property once maintanance costs have been taken into account and having the hassle factor of dealing with a tenant.

The thing about stocks and shares is that you can't guarantee (or really estimate) the return. You really need to be in a position to let the money sit there for a suitably long period and - over time - it should grow.

You mentioned in your original post that you were thinking of investing some in a SIPP. That is definitely a long term investment - you wouldn't be able to get the money out under any circumstances until you were 55. However, depending on your marginal tax rate, you would get a 25% to 67% uplift on the amount you invested as a tax rebate. Helps increase teh return but provides no monthly income. It all depends on what you want from your investment...

Original poster
Alpacinoshoohaa · 08/10/2021 20:30

Lease is up next year.
Not sure if tenant wants to carry on but I suspect its a yes.

Stocks for me would definitely be long term and I wouldn't intend to touch the money but I'd like to see what it yields.

So if I was able to get index funds of average 10% a year would that be 500 a month?

I've already got an isa with a small amount in it and a sipp with a small amount in it.

I'm mostly invested in vanguard but have what I call my gambling funds like fundsmith.
I don't think I'd put the sale money into gamble funds.

OP posts:
Original poster
Alpacinoshoohaa · 08/10/2021 20:31

Ok 40s and this would be my pension as I don't have one.

If I keep the property its my pension as well but its the worry of it that weighs me down.

OP posts:
Original poster
Alpacinoshoohaa · 08/10/2021 20:36

Mrs Worcester and svarve petty,

Yes that's what I am also thinking, it's not in a boom area I think there is more of ceiling than elsewhere.

My capital lump sum should also rise in value.

The tax side is a huge issue, do you pay tax when selling it?

OP posts:
PigletJohn · 08/10/2021 21:36

How many hours a year do you you spend on chasing rent, dealing with complaints, arranging plumber, decorator, roof repair, tax return, agent?

What do you value your time at?

Do you already own a house?

If so, what percentage of your wealth is in residential property?

workwoes123 · 08/10/2021 21:46

We have both property and index tracker funds. The latter have given us a better return over the last 15 years than the properties have tbh and, unlike the properties, does not require constant attention and financial input 🙄. The only thing that works in our favour with the properties is that we don’t have a mortgage and they are city centre in an expensive city, so the capital value increases steadily.

If you do go for an index tracker you need to be investing over the long term to see the benefits - 5-10 years minimum.

Amboseli · 08/10/2021 21:58

We have property which I agree is a huge hassle because of the people factor. But we have had a steady rental income from them month after month for 20+ years as well as the capital growth.

We are now starting to invest in s+s ISAs but I know we probably won't see any significant returns for at least 5 years.

I think the best option is to have both. Keep the property but also put some money into shares/investment funds although the problem with these is that there is no guarantee of a set level of income every month.

PattiPritell · 09/10/2021 09:34

A financial advisor will ask how safe you want your investment to be - usually safe investment means v slow and steady so less profits. But the initial sum should still be there at the end.
High profit usually means more risk.

HotChoc10 · 09/10/2021 10:18

If it's your main pension you could put it into a SIPP (over a few years as the max you can contribute in one year is £40k, I think?) and claim the tax relief

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