This is a little different to the usual questions I get asked, but quite interesting to consider. The windfall could come from a number of sources - an inheritance, some good property deals or - as this questioner suggests winning it!
If you won £500,000, how would you invest it to maximise your monthly cash flow?
The answer you would normally get from mortgage brokers/advisers is to use your cash as 25% deposits, get 75% mortgages e.g. you could buy 5 x £400k properties, put down 5 x £100k deposits; you could of course buy more properties at cheaper prices.
Whilst this would no doubt generate multiple fees for your broker (surely not why they advise it?!) it is also a finite use of your resources. Once you had used up your cash on 5 or 20 properties that's it; granted you should have created a good income for yourself, but your capacity to continue buying is exhausted.
As an alternative you can consider buying one property at a time - but the right type of property, refinance it; then repeat as often as you want to.
You can leverage this still further by only targeting properties to buy that are currently unmortgageable. Unmortgageable properties can significantly increase the profit you generate from each purchase because:
a) Most buyers/investors need mortgages, so they can’t compete with you to buy
b) Vendors with such properties know that they can only sell to cash buyers and cash buyers never pay top dollar; thus they are already conditioned to accept much lower offers
c) The bigger profits are there if you are prepared to make 'outrageous' offers
The caveat is to understand what is making the property unmortageable (i.e. no kitchen, bathroom); know that you can solve the problem; and finally, know the cost of solving the problem is significantly less than the value added to the property by fixing it.
Using this strategy, over time you could acquire a multi-million pound portfolio and create an income that supports a very comfortable lifestyle.
These figures will add some clarity, but this is just a 'for instance'; there will be endless variations of how deals actually work out.
Granted not every deal may flow as sweetly as that and you might tie up some more cash, but it demonstrates the principle. I hope that gives some additional clarity