Buying 2 properties

alestorm

Hi All,
Long time lurker but first time poster. I've a quick question, quite broad brush and general but I was wondering what people with a bit more experience thought.

I live in an area which has quite low house prices, but rents are enough to present a decent yield. I've managed to save a good amount and am looking to invest in buy to let. I've done a lot of research over years rather than months and am about in position to move. My question is this. I'm looking to buy 2 properties. I have the funds to buy 1 outright. Would it be better to do so, then refinance and use it to buy the second, or split the cash and get a mortgage on each property?
I realise people can't give a definitive answer here and I'm not looking for such, I'm just really canvassing opinion as I've had a lot of advice each way
I appreciate anyone taking the time to read, cheers
Chris

Thrugelmir

What's your objective? Generate an income or hold out for a potential capital gain in the longer term.

G_M

Buy one.

Use a cobination of cash and finance (which is tax deductable) and keep some cash in reserve (an earning.

See how it goes. Get some practicalexperience as a LL.

When you are ready, but not too soon, buy your 2nd.

I assume you don't really need the link below, but others might:

New Landlords (general information for new or prospective landlords)

alestorm

Thanks for the replies.
In answer to the first question the objective is to raise an income entirely seperate from my main income which will then be reinvested and ultimately provide a steady return over the long term. Profiting from capital gains increases is not the aim
Are you suggesting it would be best to get a mortgage on the first property even if I could purchase it outright and keeping a warchest in reserve? My concern would be that I would be getting little in return on my reserve cash (as I have been for the period of time it has taken to accumulate it), the driver behind this plan is to make my savings work as a long term investment, and of course involving finance 'unnecesarily' is at a cost which decreases my return even if the interest is tax deductable. However I can also see the benefits as a more stable, less risky route. I appreciate the advice.
I've done a huge amount of reading as is only sensible, but you can never read too much and have too much good advice so thanks for the link
Cheers
Chris

G_M

There are two aspects to this:

1) the pure maths.
* cost of mortgage
Vs
* tax saving +
* earnings on freed up cash

2) Access to cash- it's available ready for next purchase; or to cover costs of the tenant from hell / unexpected property cost etc

Of course, if you have already budgeted a decent contingency fund then your need to for mortgage reduces.

Lord_Baltimore

Ignoring the financial aspect in terms of yield for a moment, you need also to consider your own mental attitude and well being.

I would guess that your position as fiscally stable suits you very nicely (as it would most people) and in that respect I would suggest a bird in the hand is worth two in the bush. Buying one property and using it to finance the other more closely resembles the way your finances, and you, are organised now and with which you might be best comfortable.

Nobody wants to have a mortgage. Why burden yourself with two? Yes, it is a potential business but Landlordship is also a minefield - tenants, upkeep, obligations, legals etc.

Don't run before you can walk Chris. If things go pear-shaped, you still own a property outright and that can protect you from any disasters with the other. IMHO, it minimises the risk but then again, if you're a risk taker.....