How to Buy More Than One Investment Property

The first step is to think about your investment budget and consider how many properties you can actually afford at once.

You may have found a particular apartment or house that ticks all the boxes, with the only downside being that the price of the investment property leaves you with no cash left over.

You may be considering using your entire budget to buy just one property for now and then using rental income from the investment to fund your second purchase.

While this is certainly an option, it’s not a good investment strategy if you want to build a property portfolio quickly, as it could take years before you’ve saved enough money to fund your second investment.

If you don’t want to be left having to buy one rental property per year and instead are looking to kickstart your portfolio, consider the following options.

Instead of investing in off-plan or new build homes, many property investors will purchase houses or apartments in desperate need of renovation.

Otherwise known as a ‘fixer-upper’, these property types are popular with those who like to buy at a lower cost, spend money renovating it, and then sell it for an increased price.

Because this method allows you to find more affordable deals, it could be a good option if you’re wondering how to buy more than one investment property with one budget.

Fixer-upper homes are often listed by estate agents or sold at auctions. Guide prices can be significantly lower than the typical average house prices on the market.

Any money you make from capital gains can be used to buy additional investment properties and grow your portfolio.

However, with this strategy, you need to allocate funds towards the cost of renovation, which requires time, planning, and expert knowledge.

Pros of This Strategy

• Flipping houses can be an excellent way to make significant returns in a lump sum for further investments.
• Buying houses or flats in need of renovation means you’re able to pay less than you would normally, allowing you to spread your budget across multiple properties.
• By renovating existing properties, you can draw in potential buyers thanks to the modernisation of the property.

Cons of This Strategy

• Expert knowledge and experience are often needed to ensure everything runs smoothly. With this knowledge, you’ll know the most cost-effective ways to renovate each property.
• It may take some time before the renovation is complete and the properties can be sold, leaving you without any returns for an extended period.
• There could be complications with the renovation, which may add unexpected costs to your investment, potentially leaving you out of pocket.

Say you have a budget of £200,000 and you’re hoping to buy more than one investment property at once. You’re inevitably going to run into difficulty finding properties cheap enough to fund multiple investments with this budget.

However, if you used buy-to-let mortgages or payment plans to fund your investments, you could spread your budget across multiple properties.

With a buy-to-let mortgage, you need to put down at least 25% of the property price as a deposit (sometimes more depending on the mortgage provider you use).

This means that with a £200,000 budget, you could buy five properties with a value of £120,000 by spending just £30k on a deposit for each. You would then be left with £50k of your budget and could use part of your rental income to fund mortgage payments.

With the option of a payment plan offered by some property investment companies, you can split your payments into smaller, more manageable chunks. Payment plans give more flexibility for those wondering how many properties can you own on a tighter budget.

For example, some investments allow you to pay 50% upon reservation and 50% when the property is complete (for an off-plan purchase). Others may have a plan that allows you to pay 25% upon reservation, 25% further along the process and the final 50% upon completion of the project.

Pros of This Strategy

• Buying an investment property to rent with the help of a payment plan or buy-to-let mortgage allows you to put the remaining amount of your budget towards more investments.
• Depending on the amount of money you have available, you could build a sizeable property portfolio much more quickly.

Cons of This Strategy

• Securing a buy-to-let mortgage may be more difficult for overseas buyers or those investing in certain off-plan properties.
• Investing in property with a payment plan is more prevalent with off-plan purchases, so buying more property with this method would be unlikely if you want to buy completed homes.
• Using this method will eat into your rental income and returns, as you will need to spend some of the money paying off your buy-to-let mortgage.

This could be a good option for you if you want to use your budget to secure a few properties and then pay the rest of the amount once you’ve had some time to save more money.