Advice on best way to invest a lump of cash, to generate rental income.

Hey all,

First post on this forum :-)

I'm hoping for some honest feedback and guidance on the following...

My girlfriend and I have £30k saved and this should soon increase to around £45k, maybe in around 12 / 18 months or so. we're just planning some ideas for the money, in advance.

We currently rent a property as tenants and are considering making a move in to property ownership. We don't own any property at the moment. We have a long term goal of reaching Financial Independence, primarily through property as landlords (buying for positive monthly cashflow) and would like to make our first purchase of a rental property soon. For context, we're both 35.

I'm thinking that it could make sense to use the £45k savings for 20% deposit on a rental place, (maybe £30k or so of the savings) which would be probably the minimum possible for a flat or small house where we are in the Midlands. The remaining £15k of savings would be for a small place of our own (10% deposit), meaning we wouldn't then be renting the place we're in at the moment. These are just loose ideas, but as experienced landlords yourselves, what would you say would be the best approach in our current situation?

- Would your first buy be a rental vs having your own place initially?
- Should we continue to rent the place we're in, alongside our new rental purchase?
- Would you say we should put all funds into a larger rental property, or split it as I've mentioned?

What do you think should be our first steps and the best way of maximising the return on this money?

Any thoughts would be appreciated!

Thanks all :-)

Dave.

Good point and one certainly worth considering, thanks Handyman :-)

Hypothetically speaking, if only one property could be obtained and we went for the rental property only, do you think the lenders would look more favourably on us continuing to rent ourselves too, or would having a second property (our own) to pay for would be 'better' in their eyes, as at least they have the security of obtaining it in worst case scenario?

Following on from your above comment, I'm assuming you would advise we maybe go down the route of a single property - the rental one and continue to to be tenants ourselves in the current place? Is that what you would do?

Also, do have any investment properties yourself?

Thanks again.

- Would your first buy be a rental vs having your own place initially?

No.

No-no-no-no-no-no-no-no. Terrible idea. Naughty Altonator... look at what you did, and in your bed! Always sort out your own home first before playing in the private rental sector. Otherwise you're just in a giant merry-go-round of funny money... someone is paying your mortgage, you're paying someone else's mortgage... what's the frikkin' point? You wouldn't be a big fish... you'd be a tiddler and I assume you'd still have real world jobs... so this won't be your main focus... nor will you have that interested in it. The sector is moving... negatively... not in favour of Landlords... pay attention to the News man... figure it out. Where do you think the taxes are gonna rise to pay off all this Covid debt? Landlords will come in for more than their fair share. Stay out of it. In fact, run for the hills... get yourself a nice little nest sorted out for you both, and exit the merry-go-round until things start to be more understood. Now is not the time for what you're thinking. Stop paying the mortgage for your Landlord and get some positive debt yourself that will be at a low interest rate, fix it for as long as you reasonably can and prepare to ride this out while paying down your own debt... benefitting you... maybe in a few years you'll have a chunk of equity and you can remortgage to get the funds back to start to play... but that's another thought for another time. Your current plan isn't a plan... it's a pipe-dream. There's no pot of gold at the end of this rainbow... not now.