What would you do with an inheritance?

Hi WillK,
And a big welcome to you too – I hope you find good information on here to help you on your journey.

You have indeed set yourself on a wealth path, and the inheritance can only help….. What you should do may well be quite different for different people, depending on each one’s goals. e.g. Paying off a rental IP would be a VERY conservative move, slowing your path to financial freedom. In return though, such conservatism is a very safe path too.

If on the other hand, you were wanting to GROW your portfolio (as you indicate you want to do) then I would offer an alternative to this :-

Put 300K in my offset account so I won’t pay any interest on my rental and purchase my second property and minimise the interest on that one. Use the income of the properties to pay off the bank loans and purchase further properties.

Terry has already mentioned “buy a PPOR if you don’t have one” – and that is a sensible use IF it suits you to do so (you might be in a situation where purchasing a PPOR doesn’t make sense right now – e.g. if working out-of-state, and wanting to buy only when you “come home again”).

My thought would be to pay down any/all NON-deductible debt – your PPOR (if you have one), car loan, credit card, etc and not even look at paying down IP (deductible) debt at this stage. Instead, use some $$ as deposits on more IP’s, then use the Offset accounts to “Store” cash (and reduce Interest too) until another good buy comes along.

Nothing wrong with paying down debt at all – but do it in the right order (NON-deductible first). The use of an Offset provides a way to simulate “paying down” an IP mortgage without losing the flexibility of access to YOUR $$ when a “better use” option comes along for you.

Benny

Just food for thought – My friend got a large inheritance and paid off her PPOR. However, now separated she is going to lose this $$$ upon the sale of the home (50/50 split). I would make sure you have an agreement with your husband first before paying off PPOR. Also, lawyer told her it would’ve been better for my friend to buy a property in her own name using the inheritance. She would’ve ended up holding 100% of the property.