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Never Buy Investment Property for Cash: Here’s Why

  • Writer: Joe Woodhouse
    Joe Woodhouse
  • 21 hours ago
  • 1 min read
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Some people think paying cash for an investment property is the “safe” option. I

couldn’t disagree more.


I own multiple rental properties, and I always use a mortgage. Let me show you why

leverage beats lump‑sum.


Take a £200,000 property that rents for £10,000 a year. In five years it’s worth

£250,000.


• Cash purchase: You invest £200,000. Your rental income is £10,000 per year,

£50,000 over five years. Your capital gain is £50,000. Total profit: £100,000.


Sounds decent, right? Now watch what happens when you use debt intelligently:


• Leverage: Instead of sinking £200,000 into one property, you split it into four

deposits of £50,000 and take a £150,000 mortgage on each. You now own four

properties.

• Rental income: £40,000 per year. Mortgage payments: roughly £24,000 per year

(interest‑only).

• Net income: £16,000 per year. Over five years: £80,000.

• Capital gain: the same 25 % appreciation on four properties—£200,000.

Total profit: £280,000.


That’s almost three times what you’d earn buying a single property outright.

Yes, you take on debt. Yes, interest rates and cash flow matter. But when you

understand how to use mortgages strategically, you control more assets with the

same capital and multiply your returns.


Interest‑only mortgages are my tool of choice for buy‑to‑let. They keep your monthly

payments low so you can reinvest surplus cash or absorb market shocks.


Don’t let “debt fear” hold you back from building wealth.

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