WWYD - inherited money/property

[Hamsternautss]

No idea what the best way forward is in our situation so just looking for thoughts. I've never had "spare money" so wondering how to make the best of what I've sadly inherited from my lovely dad.

Our current situation;
We own 25% of a shared ownership 3 bed house outright with no mortgage on our share (105k equity of 420k) and live in Surrey. We pay £700 a month for rent/service charge. Moved in this January. Need to live in this location due to partners job. No debts.

dH earns around £40kpa. I have been out of work for 7yrs with 3 children, aged 7 to 2 years old. I will start looking for part time work when my youngest starts reception in 2024 or maybe when they start nursery next year if I can get something to suit school runs/holidays etc. Our budget is very tight until I go back to work.

My dad who lives about 120 miles away suddenly passed away this April. I'm his only child and have inherited around 100k in cash and have just had probate approved. I now have to decide what to do with his house.

His house is worth probably around £150k if it was in good condition. It needs central heating installing and requires a full refurbish including new bathroom and kitchen. In current condition a "we buy any house" type firm reckon they'd pay around 120k in its current state. It would rent out for approx £700 per month if we kept it and did it up ourselves, I'm aware being a land lord doesn't always makes money at this scale and can often end up costing if the tenant doesn't pay etc.

I'm just not sure what the smartest thing financially to do would be regarding my dad's property.

I've heard just having money in your account now is essentially just a waste and will decrease in terms of value as everything is increasing still.

We don't really want to buy the full ownership in our shared ownership house and would prefer to eventually move.

If we sold my dad's house now we could eventually do this and move again in two or three years. But until then the money would just be sat in my bank account not doing much.

The thought of spending his money doing his house up to rent makes me nervous especially if it doesn't wash its own face. We aren't doing the amazingly financially (no debts but can't save much till I work) so would be a lot of money to lose. However if it washed its own face in terms of council tax etc it would be a comfort to me to still have his house rather than every last thing of him being completely gone.

Is there something else I should be considering or that im missing? I know we need to get out of shared ownership asap to save the money spent in rent (it was our only option), I've never been very good with money other than saving it. If you were in this situation what would you be thinking of doing?

I personally think it would be incredibly difficult to
a) refurbish
b) let out a house that is so far away from where you are.

Even if you
a) get tenants as soon as you are ready
b) they pay on time and every month
c) they treat the property well
you will have to pay someone to manage it for you at such a distance and that eats into money your receive in rent, but there are not guarantees with a, b, and c

I would sell.
My first thought would be I would buy another £200K's worth of the house you are in, if the scheme allows that. That would make a big dent in the rent you are paying and you would have that much more to spend / save every month.
As you have said you don't really want to do that, my next thought would be to talk to some financial advisors as to how to best invest that money.
Ordinary bank accounts don't keep up with inflation at the moment, but you can get good returns on investments.

I think you should put another £210k into your house. Taking your ownership to 75% and your rent down to around £230 each month.

That won't stop you moving in the future and it will make your lives easier. I think to make your lives easier would be fitting for your dad's money.

Renovating and letting a house at a distance with young children sounds like a nightmare.

Don't sell your house through a "we buy any house" type place. List it with an estate agent and get the best price. Needing removation isn't a barrier to selling it. Lots of people want a project or can only afford a project. Not a problem.

Sorry for your loss

Just to add that if buying £210k of your house saves two thirds of your rent it will save you £466 each month.

If you let your dad's property for £700 you would have the expenses of letting plus the initial renovation plus a management fee I would think with the distance involved, so I don't think it's likely you would be much better off in the short to medium term - and you would still benefit from house price inflation (if prices rise) as the money is invested in your house.

Ok I am an experienced LL with 6 btl houses within 3 miles of my own house but the yields are better up North. So I bought 2 btl houses in North. This is 145 miles from where I live. I bought 1 house nicely decorated and renovated ready to let. I got EA to find me a tenant, vet them financially, sort contract, take deposit, gas/electricity readings and set up dd going into my account with rent payment. I got card from property maintenance company and gave to tenant. If they have a problem they will ring PMC if small but me if big. They have been there 18 months and apart from cooker hood breaking no other issues. They pay rent on time and in return I did not raise rent after first year. It is doable. Gas certs etc can be arranged over phone. I give tenants number of gas engineer they ring and arrange date/time to suit them. Gas engineer sends me photo of gas cert and bank details and I pay money into his account. Tenant post me one of pages of has cert and keeps other one. The second property needs a renovation. New kitchen, tiles in kitchen, new bathroom and downstairs cloakroom, new laminate downstairs and carpets upstairs. Painting throughout, new period fireplace as old one ripped out, new doors. I will get work done and add value to property then let out.

So could you and DH afford to renovate? Could you do some work yourself. I bought a pre used good quality kitchen off eBay. DH will fit it.

I wouldn't personally rent out your dad's house, it's too big a risk financially and too dependent on you finding good tenants that pay on time, look after the house and it not sitting empty at any point..... especially as you live a distance away from it.

I understand there's a sentimental attachment but I really think using your dad's money to make your day to day Iife easier would be a fitting use and he'd be please with that I imagine. So I would sell his house and buy more of a share in your property, keeping about £50k back for general savings or to cover moving costs in future.... I'd probably just put that in premium bonds if you wanted somewhere really safe to keep it.