Best way to invest £190k to generate a monthly income
Discussion
Morning all. My dad has just asked me for some investment advice and I'm not sure what the best solution is for his needs. I was hoping those of you with more knowledge and experience might be able to provide some advice. The background is as follows:
My dad is 70 and has just come in to a lump sum inheritance of £190k. He lives abroad permanently and currently doesn't have any property or assets in the UK. He is a lower rate tax payer. Due to some poor pension decisions in the past, he doesn't have much in the way of a pension, and he would like to use the £190k to help generate a steady monthly income. His risk appetite is quite low (having been burned in the past) and I would prefer he put the money in something that was relatively lower risk. He would like to generate £1000/month gross (or gross yield of 6%).
Given my lack of knowledge (and imagination!), my first thought is that he should buy a property outright and rent it out. The aim would be monthly income rather than future capital appreciation. I appreciate there are risks associated with this (non-paying tenants, void periods, maintenance) and the associated buying costs, but I'm struggling to see a more viable option (especially as he doesn't own any UK property - though he won't be classified as a FTB as he sold a property back in 2013).
If he went this route, the question is where he should buy to maximise his returns (whilst minimising the chance of attracting nightmare tenants). My preference would be for a small house rather than a new build flat (with their extortionate service charges) but I guess he needs to be flexible at this price. As I live just outside London I can't think of anywhere in the SE where his £190k would buy a suitable property. If it was commutable to me, I could manage the property for him, but anything further afield would require an agent to manage it. I had thought about buying in a university town - you can get more property for your money, but then there's the risk and hassle of renting to students!
I'd be extremely grateful for any thoughts on the BTL route, or other suggestions/investments you think might be more viable than the property route.
Many thanks
My dad is 70 and has just come in to a lump sum inheritance of £190k. He lives abroad permanently and currently doesn't have any property or assets in the UK. He is a lower rate tax payer. Due to some poor pension decisions in the past, he doesn't have much in the way of a pension, and he would like to use the £190k to help generate a steady monthly income. His risk appetite is quite low (having been burned in the past) and I would prefer he put the money in something that was relatively lower risk. He would like to generate £1000/month gross (or gross yield of 6%).
Given my lack of knowledge (and imagination!), my first thought is that he should buy a property outright and rent it out. The aim would be monthly income rather than future capital appreciation. I appreciate there are risks associated with this (non-paying tenants, void periods, maintenance) and the associated buying costs, but I'm struggling to see a more viable option (especially as he doesn't own any UK property - though he won't be classified as a FTB as he sold a property back in 2013).
If he went this route, the question is where he should buy to maximise his returns (whilst minimising the chance of attracting nightmare tenants). My preference would be for a small house rather than a new build flat (with their extortionate service charges) but I guess he needs to be flexible at this price. As I live just outside London I can't think of anywhere in the SE where his £190k would buy a suitable property. If it was commutable to me, I could manage the property for him, but anything further afield would require an agent to manage it. I had thought about buying in a university town - you can get more property for your money, but then there's the risk and hassle of renting to students!
I'd be extremely grateful for any thoughts on the BTL route, or other suggestions/investments you think might be more viable than the property route.
Many thanks
Wow I was expecting this to spark off so much debate! 
Many thanks to all those who have responded and the suggestions thus far. Taking a few points in turn:
1) I guess risk is a very subjective term. I would say the priority is to achieve about 6% return with the commensurate risk.
2) Out of interest, what sort of investments would be considered lower risk than this, and what sort of return could you expect?
3) Earning 1.5% and drawing down the funds is a complete no no for my dad - he's just not wired up that way and would hate the fact his funds are being eroded so visibly!
I did suggest he should travel the world until the funds run out but he's just not interested in that.
4) The commercial property idea does seem very interesting... I guess it's about finding the right opportunity amidst the risk of empty retail units and the supposed death of the high street. That opportunity in Hamilton does look good on initial inspection - my only immediate concern would be I don't know the area at all and how vibrant the high street will be going forward.
5) What is the best way to find the best commercial property opportunities? Do they all go through auctions?
6) If he does go the residential property route, is the general consensus to split the funds and buy a couple of properties rather than a single property for £180? I would be happy to manage any property that was bought if possible. Any pointers on areas to look at with decent yields?
7) Any other non-property recommendations that could generate 6% return?
Many thanks again for all the suggestions
Many thanks to all those who have responded and the suggestions thus far. Taking a few points in turn:
1) I guess risk is a very subjective term. I would say the priority is to achieve about 6% return with the commensurate risk.
2) Out of interest, what sort of investments would be considered lower risk than this, and what sort of return could you expect?
3) Earning 1.5% and drawing down the funds is a complete no no for my dad - he's just not wired up that way and would hate the fact his funds are being eroded so visibly!
I did suggest he should travel the world until the funds run out but he's just not interested in that. 4) The commercial property idea does seem very interesting... I guess it's about finding the right opportunity amidst the risk of empty retail units and the supposed death of the high street. That opportunity in Hamilton does look good on initial inspection - my only immediate concern would be I don't know the area at all and how vibrant the high street will be going forward.
5) What is the best way to find the best commercial property opportunities? Do they all go through auctions?
6) If he does go the residential property route, is the general consensus to split the funds and buy a couple of properties rather than a single property for £180? I would be happy to manage any property that was bought if possible. Any pointers on areas to look at with decent yields?
7) Any other non-property recommendations that could generate 6% return?
Many thanks again for all the suggestions
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