£30k, invest, mortgage or what else?

[Pie-Roe]

So I am shortly getting a sum of money, which after I pay off a couple of debts, buy a bike, holidays for the year and safety net in bank leaves me just over 30k.

I'm located in Nottingham for the next 4 years at least for University, my credit rating is average. I predict to have income (in total inc bursaries, working and student loan) of around 15.5k a year.

My thinking would be to try and get a 3 bedroom house for around 100k, on a 15 year term as a residential landlord. It's not an issue regarding low income as I have a guarantor with the correct income and equity. The mortgage monthly would be around 400 a month, and I could likely overpay that by 300ish a month (probably more really), cutting the term down to around 8.5 years. This seems like the most logical step to me, as I won't be paying out for rent which compares to a shitty rate on any investment, but I don't really know much about these things.

Anyone know of a better way to make 30k work for me? I've had a look at various things on moneysupermarket and thisismoney, but it seems like a pitiful rate of return. Investing 30k for 3 years and getting 2.3k back is a bit shite imo, compared to the benefits of buying as above.
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[Itchy]

Pyro ~ BTL is being hit by numerous changes in tax law from April 2017 it is no longer the cash cow which it was (though it was never a cash cow anyway as it relied on capital appreciation). There has been a considerable change in sentiment on landlord forums. Essentially he looked at the number of votes of renters and land lords and made a rational choice.

Here is a calculation I copied across from elsewhere (applies to I/O mostly) but has of course wider consequences.

[Ste]

Duh!

Bitcoin.

Of course.

[Polarbear]

I don't know much about the buy to let but grr666 has letting properties so he is the best to ask about that I would suppose.

I would still buy property though. I can't see it ever falling (maybe a short term drop at worst)

I would also get in there quick as the Bank of England is hinting at an interest rate hike soon so get your mortgage on a fixed rate if you can.
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[Omega]

I'd probably go with shares over property still. Right now I'd be holding onto the cash with a view to buying Shell shares in the next month or so. Property isn't worth the messing about as an investment IMO.

[Itchy]

[Pigeon]

[stevo as b4]

I know very little about housing, except that I'm pretty much against buy to let for anyone and everyone that has a few quid and want's to make it work harder/or as an alternative to very average performing pension schemes.

I'd only buy a place with the investment if:
1, Your going to live there, and look after home improvement/running costs and rely on eventual appreciation of the house in the long term for your gains?

2, Buy a place that has obvious potential and is in a good or up-coming area with great transport links close by etc. Then go in make it all smart clean and re-decorated along with adding any obvious improvements or extension/re-fitting etc to make it really saleable and desirable. Id try and do this quickly while the housing market is looking stable and house building is still accelerating.

But with option 2, I don't personally think that if you get lucky and make a good gain on developing a property, that you can keep on doing this and expect the same results over and over again. It's also something I'd only consider if I had the time and a fair bit of the hands on ability instead of just arranging lots of trades and work to be carried out and managed.

I'm actually glad that buy to let is not looking so good for the future, as it's not in my opinion sustainable for the long term when so many people now want to own and not rent a property. Also I've heard of often elderly land lords operating BTL properties very poorly and not looking after the property properly, as all they want is an extra and bonus pension, but without the hassle of getting involved with managing things properly. It's this kind of BTL owner that I'm most against tbh!

As for shares, it's very un-predictable out there, and I'd never want the risk of placing £30k in just one company's shares. I've only made small gains through shares, by buying them at low rates through share shave plans, and then at maturity buying the shares if they are at a much higher value, and selling them on again within a month or so. I'd feel far happier trading short term in shares than long term, and trying to make the most cash, as that's the million dollar risk that for me would not be worth it.

[guile]

[Pie-Roe]

Okay, I seem to have miscommunicated a few things.

If I invest 30k in shares I might make 1k a year from it. Lets be generous and call it 2k.

So out of my 2k, I still pay out 3k a year to rent, so I'm down 1k minimum a year of money I could utilise, by paying someone else's mortgage.

If I buy a house, I will be making 6k a year from two spare rooms, which is money directly going to pay off the house. Even with replacing a boiler, and sprucing the place up (which would come to less than the amount I'd have to pay out for rent as above) I would still be much better off. In the case of not having any tenants, obviously I would not overpay for the first 18 months, building a safety net of a year's mortgage to pay.

My intention would be to live in the house, and have two lodgers, (phd students or something?) which covers the mortgage, and allows me to overpay the mortgage and I can contribute some myself.
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[Pie-Roe]

[angryjonny]

30k burning a hole in your pocket? Don't own a house yet? IMO this is a no-brainer. Get yourself a gaff and pay your own mortgage instead of someone else's, if they'll give you one as a student. If not, stick it somewhere safe and buy a gaff as soon as you're on a fixed salary.

Don't see a house as a quick buck. Don't worry if the value goes up and down short term. What you're buying is a rent-free retirement.

[Edit] read the full question before you answer Jon [/Edit]

[unitynotsocri...]

Gold or silver,anything else means you ll be bummed by interest rates and the coming uncounted inflation.

People have been funneled into buy to let or the stock exchange...........because they want the people to take the hit.....


The last thing many investors do is buy in at the top of a market,yet there's no where else to go! Except gold n silver.

Stock prices and houses are massivley overvalued and due a correction.
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[RE8ELD0G]

Me, i would buy a nice big safe and then lots of precious metal in coin and bars.
In 20+ yrs its gonna be worth a whole lot more than it is now, especially platinum and palladium.
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[bikertomm]

First off open a Santander 123 account and get £~45 a month interest on 20k.

Other than that, I have no idea.

I keep coming back to this:

https://www.nutmeg.com/

Looks interesting & I know of one person doing ok from it. But don't put all your eggs in one basket ect !


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[Pie-Roe]

[Itchy]

[Pie-Roe]

The tax issues are negligible. CGT only applies to the difference. IF I choose to sell after 10 years instead of keeping and living in it or living abroad and renting it out, then sure it'll be something. But it's not a massive concern of mine. I'm not sure CGT applies if it's your home you have a lodger in either, but these are all questions I will be asking a financial advisor.

Even if the price of housing falls, the amount in rent won't decrease much in the area, especially with the nature of the student area, not in the time frame I'm looking at anyway.
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[Itchy]

[Pie-Roe]

Yeah, I'm just wanting to buy a house to live in and have some lodgers pay my mortgage for me. Re-mortgaging one to get a mortgage for a second has always seemed like a risky idea to me, not something I'd entertain.
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[dodsi]

I think for your situation you really are best off with the property as it cancels out a large cost in your life (rent/place to live) and each of those payments are money back in your own pocket.

Look at it this way, in the time you own the house if you 'only' pay off 10k worth of equity your 30k becomes 40k AND you have not paid rent for X time.

Few investments will do that much in real world terms with the level if risk.

With my simplified man-maths I have not taken into account for a potential rise in property prices.

Had you already owned a property then paying off that in equity would also in real terms save you a lot of money over time.

[Sabs]

Buy a house, it's good to be on the property ladder. Aside from things now, when you're older and looking to settle down, you'll have something already which will make your life a lot easier.
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[guile]

Think your expectations of the stock market are very optimistic. Stocks go down and crash often. The ROI from the FTSE over the last 20 years is a joke when you account for inflation.

https://www.aboutinflation.com/_/rsrc/1371880569544/inflation-adjusted-charts/world-indices-inflation-adjusted-charts/ftse-100-index-inflation-adjusted/FTSE_100_Index_Inflation_Adjusted_Historical_Chart_May_2013.png

[trevor saxe-coburg-gotha]

Sam, if you go down the buy to let route be careful to suss out how much you will get from rent against the mortgage on a three room place. W/ a bit of effort it will be possible to find a place for the same price but which has the potential for a quick four (or even five) room conversion. For instance, it's not uncommon for some semis to have one room built over an integral garage - which can easily be sectioned into two viable rooms. The extra rent this generates quickly recoups the cost of a bit of stud wall crap. Even converting an integral garage can be a quick and fairly decent way to get a quick, third or fourth room. Think about loft potential too. Any way you can obtain an extra room or two will make the property loads more lucrative.

Second, suss out what the best location for students is. Third - don't rule out going with a property management company - yeah they'll take a slice but the other hassles it can save (esp. when come time to get new tenants) isn't to be sniffed at.
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[Robby]

Yup, buy a house. Even if you only get one lodger renting a room for ~£350 a month, your overall living costs will still be lower than renting half a flat.

I wouldn't look at it as an investment, I'd look at it as having somewhere to live that you own. Any money you make out of it is a bonus.

Property prices might go up or down, but if you're spending £100k on a house its unlikely to go down a long way.