Windfall on the way any suggestions on getting into property/letting?

[haylady]

I'm expecting 200k in the next few months which is a real bonus. Any advice on how i might use it to generate an income? Timing could not be better. My marriage broke up in November so i recently moved house and will be looking for supply teaching work in September. I am currently jobless with 3dc but do not want to live off this money unless it is really necessary.
So should i just buy a property outright? i'm in a lovely area in NI where property prices have fallen a lot but may fall further. The idea of generating an income as a landlady is appealing but have no experience and i really do not want to blow this. I do not have a good business head. My debts are about 2k.
Any advice appreciated

Or is it just daft to consider property as a viable investment these days?

I knw nothing whatsoever about property and investment, but whereas I wouldn't take out a buy-to-let mortgage, or any other loan to buy an investment property atm, you won't have a mortgage to pay - so it may be worth starting by browsing a few estate agents to see what sort of property is available for £200k, then having a look to see how much rents are on that type of property, in that area. Obviously a good deal of rent would disappear in whatever overheads you would have, not covered by the tennants, and letting feees etc, but it might give you an idea.

I would also talk to an independent financial advisor and / or accountant because you will need to think about how any income might affect your benefits / whether you would be taxed on the income from the let etc.

But I agree that you need to find a way to make the money work for you, not just spend it week by week.

Thanks Blu, I will try and get a financial advisor. Do you just google for one in your area? I do like hearing people's ideas/experience on here as well. My ideal scenario would be to get a teaching job as it would then make it easier to get a mortgage to buy a property as our home. I could then put down a good deposit and would then think about investing in a buy to let property. At the moment without a job i would probably just need to buy a property outright and then do my best to get enough supply work to live on. Teaching jobs are few and far between at the minute. I'm currently renting. I just think there must be better ways to invest the money and i want to get it right this time.

Ah, right, when you said you moved house, i didn't realise you were renting at present.

There would be lot to be said for using the money to buy a property to live in, wouldn't there? personally I think I'd do that before buying a property to rent out. Then when you have a job you can start to save, if possible, using tax efficient means like.....I don't know!!

Presumably if you keep the money in cash or savings it will discount you from any benefits you might get now, whereas if you buy a home you won't need to claim housing benefit but could still claim Jobseekers etc so that you can feed yourselves until you find a job?

A mortgage / rent is the biggest household expense for almost everyone - if you can live mortgage-free you're giving yourself a big start, afaics.

I'd buy a home for myself before worrying about rental income, tbh.

My first reaction was great i'll buy a house but i think prices here have not bottomed out yet and i've probably got the wrong end of the stick but had the impression that i might be v heavily taxed if i own my own property outright rather than if i had a small mortgage.

My plan is to actively work as a supply teacher 3 days a week if i can get it from September.
I just worry about the future at times re financing my dc should they go to uni as my x is v unreliable with money.

I don't think owning a house outright would have any bearing on your tax situation. Tax relief on mortgage interest was abolished in the 1980s for personal mortgages (but is still taken into account against rental income for BTL mortgages). If prices haven't bottomed in NI yet, would you be any better off buying a house to let and paying rent yourself to live somewhere else rather than buying one to live in?

Could you buy a house with an annexe which you could rent out and live in the main part of the house Might be possible under the rent a room scheme and you 're not liable for tax under a certain amount.

Yes lala am wondering about that one myself. Just a bit concerned that i have no income just now and with all the cuts in education i'm a tad worried about getting work in the autumn.
mumzy i like your idea and am also interested in maybe letting a room on a B&B basis as we live in a popular resort so am looking into all this. As property still ain't exactly cheap and a 4 bedroom house would use up all the money i wondered about getting a place with a garage and then getting it converted to a studio flat over time to let. Ideas ideas...

You don't need to think of it as an all or nothing - you could put £150K towards your own home and £50K towards a rental if you wanted.

I would prioritise your own security first though. With money you save in rent you can start putting towards your DCs future and be more relaxed about your own present circumstances, win-win. Letting out property can be very stressful (just look down the property boards for misery-threads proof) and also require lumps sums at nasty turns, as with all property ownership. You might find that investing in other financial products is more predictable and secure.

If it was me I'd get my own place though. If you can live mortgage-free do it.

Look at typical rents in your area. From what I can see rental property is much more of a commodity than development (buy, renovate, sell). The number of bedrooms will decide the rental income. I think that for most normal property Housing Benefit is a constraint.

Typical yields on rental property I think is under 10% ie a £200,000 house will yield rents of less than £20,000 per year. This is when the property is let for the whole time with no gaps. You will then have to look at changeover cleaning and maintenance. Dont forget there will also be repairs to be done.

Thanks everyone,
Yes property letting does sound stressful. A 3/4 bedroom house costs about 175k+ in my area. As i'm not in a permanent job though does that not mean i won't get a mortgage? I reckoned i would have to buy a house outright anyway.
I will google a financial advisor in my area to check it all out.