What to do with 100K

[sam.r]

NoelWatson said:

Dave_ST220 said:

NoelWatson said:

sam.r said:

NoelWatson said:

sam.r said:

in 10 years time the price of the properties would have gone up.

Can you guarantee this statement?

Edited by NoelWatson on Sunday 26th July 17:46

No.

Do you think houses will be worth less in 2019 than now?

I would guess around the same, unless we have big inflation and consequent wage increases.

House prices will be static for a DECADE, is that what you are now saying? Define "around the same" please. +- 1%? More?? less?

my debate is more with the fact that people seem to believe that the only investment is property

Hi Noel,

Can you offer a little bit of advice.

I have a couple of properties that return good rents and am looking to invest some more. Going by what you say there are much better options out there - can you let me know a little more about what you think is better (not just by returns but also ease of doing it)as i'm quite blinkered to houses....

[NoelWatson]

sam.r said:

Hi Noel,

Can you offer a little bit of advice.

I just offer an opinion, not advice. My personal belief is that the stock market looks much better value than property.



but that is not to say it is guaranteed to outperform in future. What approx net yields are your current properties giving (based on current values - not what you paid for them)?

Edited by NoelWatson on Monday 27th July 19:07

[steve1]

I suppose seeing as I started this topic I'd better come back with some more deatil of the property I was looking at as an investment.
Brand new 2 bedroom apartment, 2 equal size bedrooms, 1 en-suite, plus a decent size bathroom with shower fitted over bath, good size lounge/dining area, plus a decent size size kitchen.
Overall size was 679 Sq ft.
Asking price was £115,995 for a first floor, with balcony.
Ground rent £125.00 per year.
Service charge £880,00-£1,100.00 this was an estimated figure, as it was "plot specific".
Council tax £1,116.84 per year.

I found out that these will rent out for around the £550 per month mark, so taking all the figures at the max mark, this will return approx £4250 per year before tax.
Does this sound about right, or have I missed something.

[quyen]

steve1 said:

Asking price was £115,995 for a first floor, with balcony.
Ground rent £125.00 per year.
Service charge £880,00-£1,100.00 this was an estimated figure, as it was "plot specific".
Council tax £1,116.84 per year.

I found out that these will rent out for around the £550 per month mark, so taking all the figures at the max mark, this will return approx £4250 per year before tax.
Does this sound about right, or have I missed something.

Annual Rent = 11 * 555 = £5,500 (assuming 1 month rental void)
Service Charge = £1,100
Estate agent fee = 10% * £5,500 = £550
Furniture Wear and Tear = 10% * £5,500 = £550
Ground Rent = £125
Annual Gas/Electric Safety Cert = £50

Landlord insurance = 0 assuming it is covered in the service charge
Council Tax = 0 as the tennants should pay this along with the ultilities.


Gross income = £5,500 - £1,100 - £550 - £550 - £125 - £50 = £3125

This might be slightly optimistic as no allowance has been made for repair bills in the flat nor non payments by tenants e.t.c.

[steve1]

Explain 1 months rent void, also the flat would be let unfurnished apart from white goods and carpet/flooring/curtains, and it would be made quite clear that apart from major breakdowns of goods, any unforseen wear and tear will be paid for.
Will be marketing myself, so no agents fees.
I actually never thought that tennants would pay council tax, so that's a bonus.
So my calcs. come to £5375 per year now, this is obviously before any deductions.
Is this reasonable.

[steve1]

The rent I qouted is below what others are getting, I allowed for that.
I am of the old school, if someone doesn't pay then they don't get, don't ask me to explain any more.
There will be no mortgage, it's a cash buy.

[quyen]

steve1 said:

I am of the old school, if someone doesn't pay then they don't get, don't ask me to explain any more.

Sounds like you are a hands-on kind of a guy.

Re: rental void - this is when you have no tenant and hence no rent from the property. This normally occur during the time between one set of tenants moving out and the next moving it. Ideally, you would want the next tenants to move in immediately but you often have to compromise a bit if you want a wider choice of tenants (i.e. only few tenants will be able to move in on the day that you want them to).

Assuming that the property will be empty for 1 month each year is fairly reasonable but, of course, you could do much better than this and have little or no void at all. The void peroid is a good time to do any repairs e.t.c.

If you want to find the tenants yourself don't forget to get a tenancy agreement drawn up (cost £0 - £100) and you'll need to insure their deposit with a deposit scheme (cost approx £30).

[steve1]

quyen said:

steve1 said:

I am of the old school, if someone doesn't pay then they don't get, don't ask me to explain any more.

Sounds like you are a hands-on kind of a guy.

That's one way of putting it I suppose, as for deposit, I would actually go down the 2 months rent up front route, so no need for deposit insurance.
Legal documents can be downloaded from the internet for free, as long as there are no special circumstances regarding the tennancy then this will more than suffice.
A long term tennant would be ideal, but not always possible.

[steve1]

The more I look at the buy -to -let idea the more I think it maybe too much hassle at the moment/what ifs and maybe's.
So, what's the best place to put my money to earn a decent return, as well as protect the capital, don't mind tying it up for a year or so at a time, ( would have done this with property ).
Not keen on dabbling in shares, think you need to do quite a bit of research before going down that route.
I will probably be getting a call from my bank soon, they always want to talk when you have money, but just want to know what you guys think.
Thanx.

[NoelWatson]

steve1 said:

The more I look at the buy -to -let idea the more I think it maybe too much hassle at the moment/what ifs and maybe's.
So, what's the best place to put my money to earn a decent return, as well as protect the capital, don't mind tying it up for a year or so at a time, ( would have done this with property ).
Not keen on dabbling in shares, think you need to do quite a bit of research before going down that route.
I will probably be getting a call from my bank soon, they always want to talk when you have money, but just want to know what you guys think.
Thanx.

"Not keen on dabbling in shares, think you need to do quite a bit of research before going down that route."

What is wrong with buying a cheap index tracker?

[Dr_Gonzo]

quyen said:

steve1 said:

Asking price was £115,995 for a first floor, with balcony.
Ground rent £125.00 per year.
Service charge £880,00-£1,100.00 this was an estimated figure, as it was "plot specific".
Council tax £1,116.84 per year.

I found out that these will rent out for around the £550 per month mark, so taking all the figures at the max mark, this will return approx £4250 per year before tax.
Does this sound about right, or have I missed something.

Annual Rent = 11 * 555 = £5,500 (assuming 1 month rental void)
Service Charge = £1,100
Estate agent fee = 10% * £5,500 = £550
Furniture Wear and Tear = 10% * £5,500 = £550
Ground Rent = £125
Annual Gas/Electric Safety Cert = £50

Landlord insurance = 0 assuming it is covered in the service charge
Council Tax = 0 as the tennants should pay this along with the ultilities.


Gross income = £5,500 - £1,100 - £550 - £550 - £125 - £50 = £3125

This might be slightly optimistic as no allowance has been made for repair bills in the flat nor non payments by tenants e.t.c.

The service charge will normally include buildings insurance but not necessarily 'landlords' insurance aka Property Owners insurance. If it's let unfurnished you'll have little or no contents however you'll still need to get a PO policy to cover you for liabilities. It shouldn't be that expensive though. I've got a flat worth approx 180k furnished with 10k contents PO policy and it's £150 p/a.

Also, the agent's management fee (if you use one) will more likely be over 10% PLUS VAT. For a single property you'll be looking at around 12% plus VAT from a decent agent (depending on your location of course). They'll probably also charge you a tenant finder fee on top of that which may be as much as 50% of one months rent plus VAT. This is likely to be higher if you use a tennant-find only service.

You may also have to pay some council tax for any void periods.

[Soovy]

Put it in a savings account. Buy a 550 Maranello.

Job done.

[quyen]

steve1 said:

The more I look at the buy -to -let idea the more I think it maybe too much hassle at the moment/what ifs and maybe's.

Agreed. However, it is worthwhile, IF you can find a bargain (e.g. try looking for a house that will give you something around 10% annual rental return - easier said than done of course!) that will give both a healthy income and capital gain in a few years time. If you do find a bargain then it is worth taking out a mortgage to maximise your income and capital gain using the gearing/leveraging effect (http://members.shaw.ca/RetailInvestor/leverage.html) . Unfortunately bargains will not jump into your lap so you'll need be patient and to do a bit of work to find them.

steve1 said:

So, what's the best place to put my money to earn a decent return, as well as protect the capital, don't mind tying it up for a year or so at a time, ( would have done this with property ).

If you want to protect your capital then a saving account is your way forward. You can get 4%-5% interest if you are willing to tie up your money for a few years ( http://www.moneysupermarket.com/savings/ ).

steve1 said:

Not keen on dabbling in shares, think you need to do quite a bit of research before going down that route.

Only dabble in shares if you're comfortable with losing your capital.

steve1 said:

I will probably be getting a call from my bank soon, they always want to talk when you have money, but just want to know what you guys think.
Thanx.

Tell them to mind their own business and take your time to make the right decision

[NoelWatson]

quyen said:

Only dabble in shares if you're comfortable with losing your capital.

When did the FTSE last go to zero? Assuming that A BTL is a leveraged investment, is there not a danger of losing all your capital also?

[quyen]

NoelWatson said:

quyen said:

Only dabble in shares if you're comfortable with losing your capital.

When did the FTSE last go to zero? Assuming that A BTL is a leveraged investment, is there not a danger of losing all your capital also?

Fair point. Both property and equity investments can lead to lost of some/all of your capital. Leveraging can also lead to negative equity (i.e. lost of all your capital and more!). Only invest if you are willing to take the risk.

Although the whole FTSE have never reach zero, blue chip companies can lose 90% or more of their value very quickly (e.g. RBS) and some have even gone bankrupt. This, for me, makes it too dangerous to dabble in shares directly. But horses for courses and all that...

[bazking69]

I'd personally buy a half decent car, say 20k tops, and put the rest into a BTL property. Monthly income and an appreciating asset.

[shamrock]

bazking69 said:

I'd personally buy a half decent car, say 20k tops, and put the rest into a BTL property. Monthly income and an appreciating asset.

What happens if the asset depreciates and the owner can't find a tennant?

Not such a good investment then.

Last thing I would put £100k into as an investment would be property at the moment.

[steve1]

haworthlloyd1 said:

you may be of the old school steve, but what about the tenancy deposit, your address on the letting agreement, you being traceable by the landregistry.

if you are of the old school it doesn't work that much nowadays - you may get someone paying up but equally you are just putting yourself in the firing line for trouble for no reason.

why be a reasonable man who has to resort to violence - they could ruin your noble, 'do' your family etc and for what? a few hundred quid a month?

its not worth it at all imho - i have vacant properties because i just don't want hassle. you may get lucky, you may not but the one thing i will say is when i'm lying on a beach i don't want to hear that my house is torched, someone is going to sue me, a tenant hasn't paid etc etc.

you hear the wonderful stories and i agree, when houses are appreciating 15% a year it makes sense however i think personally those days are gone.

You must have taken it the wrong way, I would never resort to violence not myself anyway.
It's one of the reasons I have decided to forget the idea of buy -to -let, not enough return for my money, and it's not as though property is going anywhere at the moment.
By the way, the noble has long gone.

[steve1]

haworthlloyd1 said:

quyen said:

NoelWatson said:

quyen said:

Only dabble in shares if you're comfortable with losing your capital.

When did the FTSE last go to zero? Assuming that A BTL is a leveraged investment, is there not a danger of losing all your capital also?

Fair point. Both property and equity investments can lead to lost of some/all of your capital. Leveraging can also lead to negative equity (i.e. lost of all your capital and more!). Only invest if you are willing to take the risk.

Although the whole FTSE have never reach zero, blue chip companies can lose 90% or more of their value very quickly (e.g. RBS) and some have even gone bankrupt. This, for me, makes it too dangerous to dabble in shares directly. But horses for courses and all that...

one company is a risk but not 100 companies or so that make up the ftse 100 - it has dropped a bit in times but is still yielding a good amount and is hassle free - ok it may drop a fair bit but so can a house that has subsidence/needs repairs etc. The amount of times people say i have earnt £50k from that property then go on to recite the new carpet, kitchen, bathroom, conservatory they have added over the years etc.

I'm hearing what you're saying, but you only have to choose the wrong company to lose your hard earned, not 100.