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.