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I know it’s subjective but what are your suggestions for an approximate £250k investment (cash).
Im 55, widowed with teenage children. I have a small portfolio of a couple of HMO, s257 HMO, single family lets, which gives me a not too bad income ie pays my resi mortgage, couple of family holidays a year, eating out, uni fees but because I was widowed at such a young age I’m paranoid about being able to look after myself if I have I’ll heath, disability or something else happens I want to be able to help out my children in the future with deposits etc
i live in Hertfordshire
My overall objective is income.
1. Stick it in the bank!
2. Reduce some existing mortgages
3. Holiday let with deposit or outright somewhere
4. Student let with deposit or outright somewhere
5. Commercial property
6. Pension, shares etc
7. Project/refurb/flip (rather fancy this as it will occupy me)
What the LTV on the portfolio (if anything)
- and what's your risk + effort appetite ? <== deciding this may drive your other decisions.
- also consider investing varying size chunks in different asset classes with varying risk (yeh more options)
8) Blow it all on a selection of toy boys.
DISCLAIMER just my personal opinion - for legal advice consult a qualified professional grown-up.
Hi Owen. My LTV ranges from 30% on a shop with residential above to 69% on an HMO.
I'm 50 and in a similar position. I don't have a portfolio, just a PPR and a £250k inherited property. My daughter hopes to start at university next year.
My solution is to create a Family Investment Company to split the legal and beneficial ownership. I'm looking at mixed use properties and some forced appreciation. Profits will be free of Income and Corporation tax, certainly up to 10% net yield and should I cease to exist, IHT is avoidable including my PPR. It also retains my daughter's FTB status and initially her shares will be low value.
My ideal situation would be 1 mixed use property with 1 commercial and 2 residential units plus a serviced/STL property as a retirement bolthole.
Holiday lets offer some advantages, especially if purchasing as a sole trader. Commercial offer a different type of investment and can also be purchased in a pension. P2P lending can be lucrative, but is also risky. REITs are another option.
Thanks Gary. So how does the family investment company work please in terms of my income and my children. I need to make sure anything that involves them won’t trigger their student loan once they start work.
I have no other income at the moment apart from the money I get through property.
A Family Investment Company (FIC) isn't a thing in itself. Its a way of structuring a company to hold assets and there are various recommendations. I discovered them when looking for alternatives to trusts and quickly realised that this was the same structure as all those affected by S24 were discussing. If you understand the basics of incorporation you will understand the basics of FICs.
I personally favour a 3 share class (type) setup. In simple terms there will be one class of shares that hold the assets, one class of shares that produce income and 1 class of shares that control the company. There are many other variants, but each class of shares can be allocated its own characteristics and different family members can hold different classes of shares. This offers a lot of flexibility and protection. It can also be very tax efficient.
This is just my amateur overview and I will take professional guidance to ensure mine is set up efficiently and correctly.
I've just read your other post and it is possible that shares can be allocated to a trust or even a pension (within rules). This can create more complexity but also offers many other options.
I am looking at a similar thing and the information regarding share structures is very useful.
- Can you tell me the resources you have found most useful in determining how to structure the company?
- Given you are planning on investing in both residential and commercial, which SIC code do you think would be best?
Thanks in advance!
My primary question has been how should I purchase property, a good understanding of the basics will hopefully save headache and heartache when I retire, age and die. I have learnt a great deal through google, just take care with the source of the information. Also, don't limit your research to property FICs, there are useful articles on FICs for many different asset classes and many different ways to structure a FIC. I found this one from the FT to give a good overview:
As for SIC codes, this is an area where I will need advice. The commonly used 68209 certainly applies, 68320 and 68100 may also apply. As I am taking a slightly different route 55900 seems the most appropriate, but I haven't a clue if this will offer any advantages or disadvantages.
I guess Gary there has to be an incorporated business to do this but because of CGT/stamp duty etc it wouldn’t be viable for me to incorporate at this stage. But it’s certsinly useful as an option if I were to do so in the future.
Yes, I've got a bit of CGT on the sale of the inherited property but it seems worth it as I can achieve a liveable income of around £25k with no Income Tax or NI liability. I can also provide a modest income for my daughter. As a significant chunk of this will come from company profits there will be very little Corporation Tax either.
Today you need to think about old age and Succession planning
Pensions today can help with this task
The new pension freedom rules are very helpfull
Diversification is not a bad thing in my opinion
Depending if your employed or self employed
I read a book called Pension Magic and it was really helpful
Old age will effect us all and it may come to a point where you wish to hand over your BTL to the next generation
and sit back or be forced to sit back This is where a Pension is invaluable
Learn Change and Adapt ?????
All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.