What To Do With £50k?

[jonny70]

Ade07 said:

Terraced house in N. West, 50k all in, rental income £450 per month, £5,400 per annum. Sorted.

isnt that the bottom of the market?

Do you not think its worth going for a 65-75 k 3 bed house? r(purely academic question, rather than go to the bottom of the market ,where there is potential more problems)

[wezo]

Leftfield choice, get yourself a nice 355 or 964 Turbo and watch it go up in value - just a thought, probably not very sound advice, but your a long time dead....

[digger_R]

jonny70 said:

isnt that the bottom of the market?

Do you not think its worth going for a 65-75 k 3 bed house? r(purely academic question, rather than go to the bottom of the market ,where there is potential more problems)

Any idea how easy it would be to buy and manage a property like this remotely? I'm overseas a lot and world love to do this with my spate cash

[Ade07]

jonny70 said:

Ade07 said:

Terraced house in N. West, 50k all in, rental income £450 per month, £5,400 per annum. Sorted.

isnt that the bottom of the market?

Do you not think its worth going for a 65-75 k 3 bed house? r(purely academic question, rather than go to the bottom of the market ,where there is potential more problems)

The potential for possible problems will not alter much from a 50k 2 bed terrace to a 3 bed 65k house. The rental return will change though, from about 11% + down to about 7 or 8%.

[Pil Sung]

digger_R said:

Any idea how easy it would be to buy and manage a property like this remotely? I'm overseas a lot and world love to do this with my spate cash

Dead easy, I have a couple that I have nothing to do with apart from getting inspection reports and monthly statements from the agent. Find a good agent though and one that doesn't charge the earth. I've had the same one for years and only pay 7%.

[northandy]

Crafty_ said:

Someone smarter than me will be able to do the maths, but I was thinking that you could re-mortgage and lower the outstanding amount and therefore the interest paid?

If your current mortgage is fixed for 4 years are there penalties for paying off during that period ?

Lets say you have £45k to use after taking some out for holiday/a few treats etc.

What I was thinking is that it might be more cost efficient to have a £75k mortgage over a shorter timescale (i.e. you keep your repayments to what they are now) than a £120k mortgage that you overpay. If there are any penalties for early pay off they'd need to be taken in to account.

Not a nice thing to mention, but should the worst happen in the next 7 years and you lose both parents the £50k will be back in the estate and you may have to borrow again to put it back. One would hope this is not likely though!

Edited by Crafty_ on Sunday 22 December 15:40

There's no liability to pay the 50k back to the estate, there will be tax though that possibly is payable.

Overpaying (providing there's no penalties) on a longer term versus normal payments on a shorter term will be the same interest cost, personally I'd go longer term and overpay just in case circumstances change and you need short term relief from the big payment.

My mortgage had 18 years to start with, and at current payment some 5 years in there's about 5 years left, but I could also drop my monthly from £900 to about £400 if I was out of work etc.

[cerberaperv]

jonny70 said:

Ade07 said:

Terraced house in N. West, 50k all in, rental income £450 per month, £5,400 per annum. Sorted.

isnt that the bottom of the market?

Do you not think its worth going for a 65-75 k 3 bed house? r(purely academic question, rather than go to the bottom of the market ,where there is potential more problems)

That`s were I come in. I source £65-70k houses with a good discount from the current value. You make money when you BUY a house, not when you sell. ;-)

Yes the tenants are similar but if you have a strict application, it`ll cut out the majority of the st tenants.

I could source you a decent prop with discount to avoid any unforeseen drops in the market, then a decent tenant to make sure the property is an asset and not a liability, as some will tell you on here. ;-)

[kiethton]

1 - ask on PH
2 - look at the PH share dealing game
3 - do the opposite of me
4 - retirement

I jest but would say to pay off all borrowings attracting over 5% interest

Treat yourself with a little of it

Invest in hug yielding corp bonds/higher yielding 'safe' shares

Or

Commercial property (every man and his dog does resi). Put it in a SIPP for tax advantages and look to gear up to c. 60% LTV...this should see an easy 10% plus capital appreciation if you choose well - the market is just starting to come back

Edited by kiethton on Thursday 26th December 23:34

[Wacky Racer]

Personally, I would pay 50k straight off your mortgage, does not need any thinking about, assuming you manage OK day to day.

A word of warning.....50k sounds like a lot of money, and it is, but it is surprising how quickly you can burn through a big wedge if you are foolish....eg, "Lotto lout" Michael Carroll.

http://www.mirror.co.uk/news/uk-news/lotto-lout-mi...


Remember, a fool and his money are soon parted.

Good luck....

[jonny70]

cerberaperv said:

That`s were I come in. I source £65-70k houses with a good discount from the current value. You make money when you BUY a house, not when you sell. ;-)

Yes the tenants are similar but if you have a strict application, it`ll cut out the majority of the st tenants.

I could source you a decent prop with discount to avoid any unforeseen drops in the market, then a decent tenant to make sure the property is an asset and not a liability, as some will tell you on here. ;-)

Interesting, I havent bought a BTL yet but possibly next year. What are the roughly the start up costs ?(like 25/30% mortgage deposit for btl etc)

[Esseesse]

Towards a holiday house if you want to be both sensible-ish and have some fun with it, ski apartment?

I used to think I would buy more properties, but now think if you just want a return then max out share ISA's. Do some reading and pick some shares that suit. 10% is pretty easy to achieve IMO, no tenants to deal with, and no capitol gains tax.

[gaz1234]

buy an m135i

[cerberaperv]

jonny70 said:

Interesting, I havent bought a BTL yet but possibly next year. What are the roughly the start up costs ?(like 25/30% mortgage deposit for btl etc)

As you'd be buying your first you'll probably ( depending on available products at the time) need 25% as a deposit. Then set aside approx a grand for your legals.
Then depending on what you buy there may be refurb costs.

[jonny70]

cerberaperv said:

As you'd be buying your first you'll probably ( depending on available products at the time) need 25% as a deposit. Then set aside approx a grand for your legals.
Then depending on what you buy there may be refurb costs.

so deposit+ 1 grand for legals? isnt there mortgage arrangement fee? surveyor? etc?

[Willhire89]

jonny70 said:

cerberaperv said:

As you'd be buying your first you'll probably ( depending on available products at the time) need 25% as a deposit. Then set aside approx a grand for your legals.
Then depending on what you buy there may be refurb costs.

so deposit+ 1 grand for legals? isnt there mortgage arrangement fee? surveyor? etc?

My view is you should only do this if you have nothing left on your own mortgage and need to leverage cash - buying one with a 75% mortgage at BTL rates (probably increasing) with ongoing management fees (can be risky if you do it yourself) plus void periods to relet plus refurbs and other costs mean there really isn't anything in it for all the stress. I know this isn't what you want to hear but at the end of a year you'll look at what you made for the risk and wonder why you bothered.

I also don't get this advice to buy three bedders.....be great if they made three times what a single bed flat does since they are twice the price but they don't....plus there's less to paint and carpet.

[cerberaperv]

Willhire89 said:

jonny70 said:

cerberaperv said:

As you'd be buying your first you'll probably ( depending on available products at the time) need 25% as a deposit. Then set aside approx a grand for your legals.
Then depending on what you buy there may be refurb costs.

so deposit+ 1 grand for legals? isnt there mortgage arrangement fee? surveyor? etc?

My view is you should only do this if you have nothing left on your own mortgage and need to leverage cash - buying one with a 75% mortgage at BTL rates (probably increasing) with ongoing management fees (can be risky if you do it yourself) plus void periods to relet plus refurbs and other costs mean there really isn't anything in it for all the stress. I know this isn't what you want to hear but at the end of a year you'll look at what you made for the risk and wonder why you bothered.

I also don't get this advice to buy three bedders.....be great if they made three times what a single bed flat does since they are twice the price but they don't....plus there's less to paint and carpet.

Sorry Jonny my reply was brief as I was on iPad and just gave a quick reply. The mortgage arrangement fee can be added to loan, and yes there would be a val fee. Cost would depend on lender but allow approx £350 -£500 avg.


Will, there's plenty of 3 beds within 30 mins drive of me which are the same price as 1-2 bed flats. They don't have a service charge and management fees like the flats. They also won't have longer voids either. . The local LHA difference from a 1 bed flat to a 3 bed house is £150 mth too. So I'd go for a 3 bed prop costing £50-£75k every time.

If the OP is careful on what he spends it can be viable, but I'd also advise on buying more than one. As you said, one can turn into a loss over 1yr if there's a high repair bill. The other would act as a buffer some months. If he's on top of repairs and keeps voids to a minimum on both props, they should make a profit. 2 BTLs are not going to allow you to give up the day job though.

[chunoo]

I thought inheritance tax was only payable over £325k?

[Crafty_]

chunoo said:

I thought inheritance tax was only payable over £325k?

I forget the exact figure, but the £50k is only part of the estate of the OPs parents. So lets say they have a £300k house and the worst happens in the next 7 years, their estate with worth £350k (house + cash), thus OP is liable.

[Willhire89]

cerberaperv said:

Will, there's plenty of 3 beds within 30 mins drive of me which are the same price as 1-2 bed flats. They don't have a service charge and management fees like the flats. They also won't have longer voids either. . The local LHA difference from a 1 bed flat to a 3 bed house is £150 mth too. So I'd go for a 3 bed prop costing £50-£75k every time.

If the OP is careful on what he spends it can be viable, but I'd also advise on buying more than one. As you said, one can turn into a loss over 1yr if there's a high repair bill. The other would act as a buffer some months. If he's on top of repairs and keeps voids to a minimum on both props, they should make a profit. 2 BTLs are not going to allow you to give up the day job though.

It's interesting how regional variations make a big difference.

Here a studio flat is £80k and for three beds (probably also on a not too nice estate) would be £140+. Rents on the flats are £550 and if you have Poles of Lithunians they seem to stick around longer and look after them. Rents on the three bedders would be £780-850 which is where our sums diverge. The lease costs will however take £70-£85 off.

We are seeing rental demand weakening in one location which may be down to Help to Buy but elsewhere demand is good. I have another one bed completing next week nicely in time for the separation season.

I've stuck the one bed plan up to now......and after several bad experiences no LHA

[ringerz]

In a similar postion to the OP. I'm a contractor lookng for somewhere relatively safe to put my money and secure my future. Considering going down the BTL route, looking at properties in the Humberside region around 45k. What's the best approach - buy outright or look to leverage?