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Large inheritance $550k+

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What do I do with an inheritance I'm going to get of around $550k?

My plan so far is:

First thing I need is a house. I don't mind renters so I'll probably get a bigger one than I need (not huge) then rent out some rooms to people and also do the Airbnb thing. Hopefully I can find a place which needs work which I can do myself.

How much should I realistically spend on this house? Seems strange to buy a house with cash then have nothing left over. Should I talk to a professional financial planner?
I would not buy the house in cash. Get a mortgage for some part of it. I can't tell you exactly how much but I would consider doing a 15 year loan on half of it, and put the rest of your cash in another , much more liquid, investment.
What would be the purpose of putting some in a more liquid investment? I don't really need the money atm and I can't see the returns beating a real estate investment.

Another thing is I don't have anyway of paying off a mortgage. I'm an unemployed student atm. I suppose I could just cash in my liquid investments and pay for the house later if I need to if the investment beats the interest rate on the mortgage.
You can start by doing some actual research into the price of homes in your area. Houses cost upkeep and maintainence and other bullshit. What skills do you have that make you think you can do any of the repairs yourself?
I've done a couple of years basic renovation work. I can replace kitchens/bathrooms, decorate and all sorts of other diy. Although I don't have any qualifications/certifications I just do the work myself and then get a qualified person to check it over and certify it. I'm using the money atm to do a computer science degree.

I'm doing frantic research into all aspects of property atm. Mainly because I'm shitting myself about what happens when the money is sitting in my bank account.
Talk to a tax adviser before the person dies. Get out ahead of this and a find a why to minimize what you're going to have to pay before you do anything else.
Inheritance tax is already paid. I'll get the money as a lump sum sometime next year when the main assets are sold and the money distributed.
This opinion is probably not /biz/-approved in any way, but it would be what would make me feel the most comfortable.

Have a liquid, six-month (maybe 1 year if you're going to own a house while unemployed) emergency fund. Savings, short term investment that you can pull out of, whatever, I don't care. Just keep it liquid. You need to have access to it.

Pay for the house with cash. You're not going to come out ahead on the interest you'll ultimately pay. Plus, it will add some stability to your life. A fixer-upper is okay, but don't go too nuts. Needs a kitchen remodel that you can do? That's great, but don't buy a rotted floor and think you can fix that. Mold, foundation issues, septic and/or sewer, or other things should all be solid. It should be in a decent area that you can sell (you're a young student, you don't know where you're going to end up). Location also needs to be relevant to your job search. Not just now, but in the future. AirBnB and roommates are cool and all, but big houses are expensive. Be careful. You're heating, air conditioning, water, lawn care, and other bills can get really fucking ridiculous really fucking quick if you buy too big. I would buy a respectable house and let it be, but if you want to make AirBnB your business, then look around.

So you have your emergency fund, house, do you have a good car? Reliable transportation is important. If you're not going to have a job for awhile, then set aside an amount for taxes and upkeep and bills for the house that will cover you as long as you won't have a job.

After that, and only after that, would I have a little fun (vacation? small, reasonable, but something man), and very importantly retirement and investment. You could invest the bulk of it now, but I think stability is more important than chance, and you want to keep your stability stable before you get into riskier things.
Since we are talking about real estate I have a question. Why would anyone ever take out a 15 year loan under any circumstances? Can't you just take a 30 year and make bigger/extra payments at a lower interest rate and pay it off in 15 years anyway if you want to.
Thanks for this. This is almost exactly what I'm thinking of doing.

My plan is to buy a 3/4 bedroom place in a big city with good transport and high levels of tourism. Targeting young professionals and students, not families or tenants at the lower end of the housing market. Live in one bedroom, rent one/two out on a long term basis and use the other for airbnb.

But even 500k is not a lot for a three bed room house in some city location.

Shit man my local real estate market is cheap as fuck I wouldn't pay more than 150 for a 3 bedroom house in a decent location. There are so many houses I wish I could buy.
Where do you live? I live in London, UK and the prices are insane, go have a look and laugh. But it is the best location for jobs, rental income and airbnb.

I could buy somewhere cheaper but I'd have to think about where I'm going to work after university, and I'd like to stay in London.
Mortgage lenders have rules on how much you can over pay each month. I bet it is reflected in the length of the mortgage i.e shorter = you can make higher payments and longer = lower over payments.

Don't quote me on that as I really don't know.
why are you going to pay in cash? The interest rates on mortgages are so low right now that to me it doesn't make sense. Do you have bad credit? If not then you should be able to get a 15 year mortgage for 2.75-3% which is barely above inflation, you can easily get a larger return on that with most index funds, plus investments are much more liquid so you can sell them more easily if you need cash in some sort of emergency.
I don't really have a credit score, if I do I've never looked at it and have no idea what it is. I've never borrowed, had a credit card and I've never been in any sort of debt so I assume it is positive(?). You make a good point though, I'll have to do the calculations. I've been looking into index funds.

Buying with cash has the advantage in that I'm likely to get priority to buy as there is no chance that my finances will fail and the property will have to go back on the market. I can also easily buy at house auctions, which is admittedly a mixed bag, but you can get deal there.
You should listen to this guy:


I'd go one step further and say you should just bite the bullet, keep living the pleb poorfag existence for a year or so while you have your money in some 3% GICs or some such. Read up, especially if you're trying to get into London real estate. It's a weird market and you might find yourself screwed any number of ways.

If it were me I'd forget buying a place to rent rooms; too subject to weird algorithms of AirBnB, too subject to Russian Oligarchs buying whole apartment blocks in the neighbourhood and renting them out, and generally not a wise thing to put your entire nest egg in one country's economy. If you secure yourself a low-interest loan, have a job, and diversify your investments beyond just real estate you'll probably do quite well for yourself but at a minimal risk.
>why are you going to pay in cash?

I have no way to pay a mortgage as I'm an unemployed student, I don't think I could get a mortgage even though I don't have a bad credit score. I have two years left in university, possibly three if I decide to do a masters. I could continue renting (I have a good deal with renting atm) until I get a job.

>If you secure yourself a low-interest loan, have a job, and diversify your investments beyond just real estate you'll probably do quite well for yourself but at a minimal risk.

But what do I do with the rest of the money? What is most likely is I'll put a certain cash amount towards a house (say half) get a mortgage for the rest. Index funds look attractive. Rental income would beat a GIC easily.
Buy land and use that land to make money.

you should check and see. I didnt even know that my mom put me on her card for emergencies a long time ago. Found out my credit score is through the roof. Credit karma is really easy, free, and doesn't ping you. Use that shit.
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