What to do with 15 000 pounds

Property. There are plenty of properties available from around £25,000 upwards, so your 15 grand could go a long way towards securing one. Put in a tenant and you could be quids in over several years. Use RightMove to do searches and you'll be amazed.

MM

I'm surprised. What's your experience of doing this ?

How much would it cost to bring them up to lettable condition ? What is the estimated capital appreciation over the 5 year term ? What is the current estimated yield ? What is the estimated occupancy rate ?

Daytona

Interesting. Two questions:

(a) Where on earth (or at least, in the UK) are there houses worth owning for 25 grand?

(b) Once you've factored in the monetary value of the time it would take me to buy the place, do it up and let it, how does the return compare to the stock market?

(c) How does this compare to a property-based investment product?

I am amazed by the number of beach huts in Southend, not to mention the garages in Hove and the holiday chalets in Camber!

tom

Aye, poor grade property, at the peak of the market, why the hell didn't I think of that as a long term money maker?!

Broadly speaking, a fund with no more than 40% equity is classed as income producing, the tax paid is reclaimed by the manager prior to distirbutions or reinvestment.

The only tax advantages to a fund with more than 40% equity is no capital gains tax, or further income tax.

Do you mean 'not income producing'?

So, if i have a >40% equities fund, even if all the dividends or whatever are reinvested, and i don't get a penny out of it during the time it's running, it counts as income?

What sorts of funds are

| | Any advice on what i should do? |

I'd invest in an combination of - ISA/ Stock market tracker / Premium bonds.

Check out Rotherham, Bradford, etc. I found 26 properties in about ten seconds. You might also try Wales. Even here in the Fens, properties are half or third the price they are down south. Can't go wrong with property.

MM

Of course you can. There's a reason property in certain areas is cheap and it's usually much more apparent why this is when the market is slow than when it is booming.

tim

I think the property idea is a good one for the long term. It gets you on the property ladder NOW, rather than in 5-10 years time when prices will almost certainly have gone up substantially, even if we are "at the peak" now. There's no special need to go for a £25k property either. £15k could net you anything up to a £100k property on a buy to let basis, although unless you have a safety net (parents?) I would recommend buying with a bit more equity (ie. 25% rather than 15%) in the property, so that you aren't so stretched if the property is vacant of rent-paying tenants for a while. Do some research on property investment now, given you have a real opportunity to do something about it. At your age, this knowledge will stand you in very good stead indeed to make serious money from the property market over the next 40 years or so. If only the rest of us were in that position now!!

Here's a book that will help you get the basics, to minimise your chances of making an expensive mistake. It's very readable.

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Go for it my friend, but do it with your eyes open. Talk to your parents about it, if you can, their experience will be invaluable.

Best wishes Jeremy

One more thought (to add to my other reply) In case you didn't know, it's the leverage effect of borrowing (mortgage) that makes property such an attractive investment long-term (compared to stock-market investments etc) - so long as the rental income from tenants covers the mortgage payments and other expenses. In other words, if you put £10k into an ISA and it grows by 5% per annum, in the first year you end up with £10,500. If you put £10k into a property worth £100k, borrowing £90k on a mortgage, and it grows by 5%, then you end up with £105k, which subtracting the £90k mortgage debt, means you've turned your £10k into £15k in one year - actual capital growth of 50%. Factor that growth over 10 years and you'll see why everyone's into property these days. BUT you must make sure you've assessed the key risk of not covering your mortgage plus expenses with rental income. The book I recommended below will help you do that.

Jeremy

Good thinking.

Work through The Motley Fool - 10 Steps guide, but instead of an index tracker, consider a high income fund as history suggests they perform better.

Daytona

I don't think it's worth worrying about internal fund/company taxation as you can't easily & cost effectively avoid it.

ISAs are free of personal tax.

Where a payment is deemed to be more interest than dividend the ISA manager will reclaim any tax deducted automatically at source by the company/fund. eg fund investing in Gilts. In effect the company/fund should not have made the deduction in the first place when payment is to an ISA.

Bl**dy hell, I'm actually quite shocked that someone who can use a computer is suggesting property as an investment. Out of interest where were you and what were you doing at the peak of the tech boom? Were you, per chance, browsing bulleting boards and suggesting people buy last minute.com shares?

I suggest you read a few of the porperty reports, eg Nationwide, Halifax etc, and try and filter into your brain the fact that property has been going down for the last 8 or 9 months....and that's ignoring inflation. Personally I can barley wait to snap up all the properties from the banktrupts in a few years time...... but I will (wait).

Jeremy below doesn't seem to agree with you. Neither do I.

MM

Prices fluctuate, but they always end up in an increase. I dug out a local paper from 15 years ago. Every property since then has increased its market value by several orders of magnitude. My father paid around £5,000 for a 3 acre smallholding in 1957. What do you think it could be worth today?

MM

MM,

Quite, the FTSE-100 also increases over time, as does cash in a building society account. I believe the rather techincal term for this is "inflation".

The fact of the matter though is that both guilts and shares have increased more in value over the last 20 years than property has. Check out this graph.

Over a long period of time property will provide a return, but it certainly won't out perform equities, and buying at the top of the cycle is finanical suicide....of course the top of the cycle would appear to have been last July, we've been going down ever since.

this book would probably be a good read....

14874227/sr=8-1/ref=sr_8_xs_ap_i1_xgl/026-3734744-6217257 I don't know why I'm wasting my time here though, it's practically impossible to talk someone out of a religion/fashion with mere logic.

"Robin Peters" wrote

Where are the graphs for *leveraged* property - say 75% LTV, and 90% LTV??

"Robin Peters" wrote

Can you buy equities with a mortgage??

In message , Tim writes

The graphs would be exactly the same because borrowing is not relevant to the price of the house.

If we read that question literally, then the answer is no because you generally cant use a legal document evidence a first legal charge over a property as way of paying for things, although a sub-mortgage might be used in some business transactions.

If you are asking if you can borrow money on your house by giving a mortgage over it to a lender and then use the borrowed money to invest in shares, then of course you can. (That, basically, is what endowment mortgages were.)