Q. I have recently been lucky enough to have been left a very large inheritance and am seriously considering investing in property as putting it in the bank whilst the country is still in recession seems a futile idea. I’m thinking of buying a penthouse with the money – do you think this is the best way forward for both rental yield and capital growth?

A. Wow – what a fabulous position to be in! I totally agree that putting the money into the bank right now is not the best way forward, as there is virtually no interest to be earned even on large sums of money. Investing in property is a win win situation; historically property usually doubles in price every ten years, therefore even if we have peeks and trough’s in the property market ultimately if you are in it for the long term property will make your money work for you. However, I am not convinced that buying a penthouse is the right choice for investment. In my opinion penthouses are to live in – not to invest in. penthouses are extremely expensive when it comes down to things like running costs, and the service charges are obviously much higher as this is calculated on square footage. Hefty service charges would ultimately eat into your profit. And the demand for rentals on the high end stock is much lower, as there are realistically not that many people around with that kind of budget that are willing to pay that type of expensive rent. I propose that you buy two smaller units, maybe a one and a two bedroom apartment. These type of apartments are the most popular and would be considered the most desirable type of rental property offering the best rental yields and inevitably produce great capital growth too. Buy in an area that is already established, of course make sure that it is close to transport links and has the entire infrastructure that drives people to want to live in the area. For easy maintenance free rentals go for newer properties, not period type as these often have endless issues with maintenance. Newer properties tend to only have minor issues like a washing machine breaking down whereas period properties can have expensive problems like leaky roofs or damp issues which can be costly. It’s all about keeping the cost down and the profits up. See this as a business and don’t look at things too personally. Speak to a trusted Licenced Agent that will give you great guidance when it comes to cherry picking the perfect rental investment. They will see things with a different eye, and put the investor’s spin on anything you may consider purchasing.