I've an interesting dilemma that will occur in a few years. My wife and I are currently overpaying our mortgage and will be mortgage free by the age of 35. We are also already putting away some money for retirement and have an emergency fund established.
Our plan has always been to continue paying the equivalent of the mortgage payments into an investment account and then use this money to either move to a bigger house later in life, or to retire earlier. This is straightforward and we should be able to retire with modest but decent pensions, plus some cash for travelling and enjoying life.
However, driving home from work I had a second idea. We could rent out our current house (which will have no mortgage) and use this rent money, less an amount to cover expenses, to overpay on a second mortgage. On the one hand, this means that the rent money is helping to pay for a second house, with none of the usual rental risk that the house sits empty whilst still needing mortgage payments. In effect, someone else is helping to pay towards your mortgage. On the other hand, it's a lot more effort than simply investing into a Vanguard LifeStrategy or similar every month and much harder to liquidate a house into cash.
I'd like to think about this now, so we can start putting money towards the deposit on a second house if we decide to go that way.
I know that a definitive answer needs some figures, which I will calculate at some point in the future, but I wondered if anyone had any general advice in this situation, or anything obvious I'm missing?