How would you invest £500k?

Hi Chris

That's a very comfortable position to be starting from, many will envy you for that. You are also getting things the right way around in that you are investing time into learning from other peoples experience as opposed to the more costly alternative, which many people seem to prefer, of jumping in with both feet and learning from their own expensive mistakes.

Before I begin to try to answer your question I have a few questions for you please.

1) Based on what you have learned so far, what is your preferred strategy and why?

2) You mention that your end goal is to give up your day job. Do you have a timescale for that and how much income do you need your property portfolio to generate to make that a viable option?

Please take a look at this page >>> http://www.property118.com/?p=61522 and the comments below.
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"maximum return and with the least amount of risk and hassle"

As with any walk of life you can rarely have it all ways.
I have low risk and hassle but I only make 4 - 5%.
I'm happy with that but if I wanted the maximum return I'd look at totally different sorts of properties to the market that I'm in. I'd also look at students & DHSS which virtually guarantee hassle but will make more money.
I stand to be corrected by others much more experienced and able than myself.

I'm in a similar position with about £700k that I've just inherited. I don't have any btl properties at the moment but I do have a half finished holiday home restoration in Italy.

The key thing is to do some research. I'm working my way through a stack of books at the moment. I hope it's OK to say this but one I would particularly recommend is Smarter Investing by Tim Hale. It doesn't deal much with property but talks about balanced portfolios and setting targets.

By balancing your portfolio, you can invest in products that may have significantly different risks but overall you're at a level where you feel comfortable. There are a couple of online services out there that will ask you lots of multiple choice questions and present you with an assessment of your risk appetite.

My thinking at the moment is that I'll finish the Italian property out of my day job income. I'll then build a portfolio of roughly £400k in gilts and FTSE 100 index funds, £200k in leveraged buy to let (when I figure out how to do that) and £100k in something a bit riskier eg FTSE250 companies and some small angel investments. That's just me and others would take a completely different approach.

The other things to bear in mind are how actively you want to be involved in running your portfolio and how this might change over time. You also need to do some tax planning and get professional advice if appropriate.

Reply to the comment left by "Mark Alexander" at "01/02/2014 - 12:09":

Hi Mark

Thank-you for your quick reply!

In response to your questions, BTLs seem to give you the cash flow and that seems a sensible way to help replace a monthly salary.

I like the idea of buying distressed properties with the intention of making a decent lump sum return (which seems the quickest way of replacing salary), Doing it up then renting for six months seems to be a good option.
HMOs appear to return higher than BTLs but almost everyone I've spoken to seem to spend a lot of time on these and appear to have more hassle, so I'm not so keen on these (yet).

As for timescales, I'd be looking at reducing my hours over a 6-12 month period and freeing up about three days a week to commit to concentrating on properties. I am looking at a net income of around £50k pa.

Good Questions posed by Mark because it's about your long term "Why" after which you can develop your how and exit strategy.
Many agents including me offer an arm chair arrangement, basically supply and manage properties for you, on Merseyside we are able to return circa 8-10% on an investment of say £50-60k We manage the whole issue supplying monthly statements and regular reports\contact so you are hands off letting us do all the work! A financial summary of that would be 60k purchase 1500 legals 2k commission 63.5k. Rent £500pcm. 10% management commission all in no vat saving 20% for which you get the assistance of 30 years Experience and a team of property experts for £1.50 a day! You can see my profile on 118 members. Good luck Don

Reply to the comment left by "Paul Jemetta" at "01/02/2014 - 12:59":

Hi Paul

Welcome to Property118 to you too.

It's property or cash deposits all the way for me, as you say, it's what we all feel most comfortable with.

Please take a look at my strategy which I've documented in 14 bite sized articles here >>> http://www.property118.com/how-to-become-a-respected-profitable-landlord/60765/

Feedback will be much appreciated 🙂
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Reply to the comment left by "Mark Alexander" at "01/02/2014 - 15:10":

Thanks Mark. I spent half a day earlier this week reading through pretty much everything on this site. It's a brilliant resource.

Reply to the comment left by "Paul Jemetta" at "01/02/2014 - 15:16":

You did well if you read 1% in half a day. There are over 3,000 posts and nearly 24,000 comments. I'm really pleased you are finding it all useful.

The Readers Questions section is a building into an extremely useful wiki as we have some incredibly experienced people providing answers, see >>> http://www.property118.com/author/readers-questions/
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Reply to the comment left by "Mark Alexander" at "01/02/2014 - 15:22":

Perhaps Paul hasn't noticed that at the bottom of the "Popular discussions" list it says "Load More Discussions"....
..I find that I can't load any more, but then I have a little proplem with opening a new window sometimes just by clicking, I have to right click and "open new window/tab", since I turned something off when I was having computer trouble, and I don't know which process it was !!

..Anyway this isn't "Agony Uncle Mark's personal problems page" ...

...but shouldn't it read " A Load more discussions" !! Haha

Reply to the comment left by "Mark Alexander" at "01/02/2014 - 15:22":

Lol. Sorry, I meant the articles from the drop down list at the top of the page and not all of the posts!! I'm sure those will be a good resource when I get going with this.