Updating post from Reddit.
Hey guys. long story short my grandfather might get ÂŁ1 million would it be wise to invest it all into the property market? What I'm thinking is that:
120,000x0.25=30,000 + stamp duty+legal fees = let's say about ~37,000 37,000/1,000,000=27 so let's say save I get 24 houses saving ÂŁ120,000 for any renovations or anything the houses need then giving some to a letting agent and managing some my self as my grandfathers brothers have 40 years experience in property btl so they can help and can get work done for "cheap".
Do you think there's better ways the money can be invested or any recommendations and advice?
Thanks 🙏
If you buy many cheap houses you'll be seeking low end residents and all the troubles that come with that.
If you go for half as many higher end properties you can get better residents who may cause less issues overall.Â
Quality > quantity.Â
So you suggest I up the budget to get into area and attract better people ok. So should I go for 250k-350K ?
The ones I've looked at were 2-4 beds within 5 miles of Manchester city centre I'm up north so house prices aren't too bad.
Obviously I'm not in a position to give business advice - but on a personal level, I wouldn't jump in and buy ~25 properties from nothing. I'd start with one, learn how it works out, then move onto another, and so on.
You're throwing yourself in at the deep end somewhat.Â
There are plenty of options for the rest of the money. Gold is probably the safest store of wealth, maybe bitcoin as well.Â
Like I said I can only speak for myself, I'm not a financial advisor!Â
Sounds reasonable but I'm looking for something that can bring in a steady income. My grandfather already has a house on rent so my family collectively has a lot of experience.
But I do think that starting with one is more reasonable and sensible.
Thanks 🙏
With the upcoming rental legislation it may be less of a sure thing than you imagine.
Have you considered dividend stock options? These would pay out consistently where rent may not.
I don't think dividends stock would be a safe options the safe options like wtf and index funds have low dividend yields. And as a Muslim who can only invest in stocks meeting certain criterias it's even harder and more risky.
Will do more research tho 🙏
Well you didn't mention the Islamic aspect.
Speak to a Halal financial advisor.Â
My bad for not being transparent enough Will speak to a halal financial advisor it's probably the best idea.
No worries I wasn't criticising you! Just saying if you want specific advice then that information would have been relevant and there's no way for anyone to guess it without you sharing it!
Best of luck, and have a good Ramadan!Â
🙏 thanks
The fact you’re asking these questions mean you’re not ready to deal with this. There’s nothing wrong with that, many people are not ready with such a large sum. Your first reaction is to invest it, so you’re definitely on the right mindset but you should just get better financial advice. Its ok to ask on reddit but definitely get financial advice as well
Property is not the only investment form, there are much hassle free form of investments and there is benefit of diversification across asset classes
Please do yourself a favour. Please do not buy anything, do not touch the money, do not agree or sign anything for 3 months. Take advice. Test more than one adviser and find someone you trust (ideally unaffiliated, whole market, charging by hour)
Ok will do more research and consult a professional thanks
I agree with this. Slightly higher budget will open up better properties with better paying and more likely better behaved tenants. Also think about who you will be renting to? Are they professionals, are they students, are they on Universal Credit?
Also don’t forget that this property management and BTL investment in general is not a passive investment. You’re ultimately dealing with people’s lives and shelter. If you don’t treat them well they simply won’t pay you.
Sounds like instead of using the money to r/FIRE you’re making yourself a full time job 🤣
Most people there just say investing into s&p 500 I don't want to invest into companies which involve gambling alcohol etc so options are limited but I will ask there aswell?
Also property is always gonna be needed everyone is gonna always want a roof over their head so I thought it was a good option.
BTL is a bad investment these days.Â
Why do you think that ? What do you think is a better investment ?
Personal experience and my background in finance and investing
Better investment for both returns, diversification and your own lifestyle/peace of mind is a well diversified stock portfolio (this can include REITs if you want more real estate exposure). There are ESG/Shariah Compliant ETFs if you want to avoid investing in gambling/alcohol
Are you limited due to religious reasons?
Yes I'm Muslim. But if your thinking how would I take a mortgage there are plenty of halal mortgages I could take.
No, not thinking that at all. I was actually going to say there are many Islamic compliant ETFs (see link below). Investments, high interest bonds and savings accounts are a lot less hassle than buying property, especially with all of the recent rule changes. It’s a very different game to what it was even 10 years ago.
https://www.hl.co.uk/funds/fund-discounts,-prices—and—factsheets/search-results/h/hsbc-islamic-global-equity-index-class-ac-accumulation
Thanks. I do invest aswell in etf but I'm looking for something that will pay monthly or constantly as it's gonna be a family business I would give each member equal profits which would be way easier from a business and more difficult in the stock market as dividends are low and would years to appreciate in value.
Thanks again tho
No worries, makes sense.
Good luck 🙏🏽
Sounds like you need professional advice, not Reddit.
Thanks I'll look into.
Cool. Sounds like a risky business venture. I'd just keep the fucking million.Â
Yh does seems it's getting difficult. But I think property is something everyone always gonna need. Everyone always wants a roof over their head.
The problem with a a tracker is that it would pay monthly which is a reason I saw real estate as favourable as it goes up in value while paying a salary.
But thanks and will do further research.
Get one property, see how it goes, and go from there.
I second the advice saying to go for a slightly better house in a better neighbourhood. Maybe look to invest ÂŁ250k into a nice-ish neighbourhood in a low cost area.
Yes now I'm thinking try 1 in a good area see how it goes
You first need to decide what your investments are for - income? Long term growth? - and over what time horizon you are planning. If he is a grandfather then I guess he will be thinking about inheritance planning and possible future care costs. Property is inflexible - you can’t get your money out quickly. Most people would advise a spread of investments - property, equities, bonds etc - to minimise risk. You need to do some more serious thinking and get professional advice.
What I want is ideally something that pays monthly like rent would and something that is scalable (saving rent then using it as a deposit for another house). Grandfather isn't too bothered about inheritance tbh he hasn't wrote a will or anything he just says that everything he has is more my father.
Equities and bonds aren't acceptable in my religion (very minimal acceptable options) and of course he isn't giving me the money he's giving it to me to start a business and actually do something good with it. As my siblings and cousins will have a share so something that can easily be divided and sent monthly would be ideal.
Thanks for the advice will look into getting a professionals advise.
It’s wild that your grandfather doesn’t have a will. Without one, this will become incredibly messy if he passes and there’s no guarantee you will get any of this money. It will also take years and years and huge legal fees to determine who his estate should go to and how.
You also need to factor in inheritance tax.
I think you’ve not thought investment - of any kind of- through and are kind of saying “rentals seem simple, why not just do that”?
You need to really do more research. Speak to an accountant. Understand what your tax liabilities will be. Take a look at the full picture and detail every cost.
And make sure there is a Will.
Start to build your power team asap: Broker Solicitors who don’t mess around Refurb/ buildersÂ
Learn the new EPC requirements, renters bill and section 8.
It’s going to be a full time job but you could complete all purchases in 12 to 24 months if you don’t hang around.Â
If you want to take it slow, buy 1 or 2 this year and wait for new EPC rules to kick in. Landlords will be giving them away.Â
i wouldn’t go btl with the current government. i cant advise you what i would do with the investment without effecting my own investment portfolio, but not btl
https://www.gatehousebank.com/personal Islamic mortgages. However they work out terribly. I know lots of landlords who get regular btl mortgages and still go to the mosque.
However with that money I would be looking to buy a block of flats but do it in a limited company to avoid inheritance tax when that time comes.
Can I just check - before asking your question on Reddit, were you planning on buying in own name or limited company?Â
Also, are you planning on working on this full time?