Unpopular opinion for the fiscally conservative AAM probably - but I would look to use conservative fixed term debt to achieve higher cash on cash returns across a number of properties while ultimately reducing the potential volatility of your cash flows....this will enhance your underlying equity returns if your gross yield (say 10%) exceeds a debt yield/mortgage cost (likely 4.x%)..you the borrower collect the spread between the two (commonly referred to as the debt yield (gross yield - mortgage interest rate)`... and then you also get a levered return any capital appreciation that may occur.
The first level thinking on all this of course is debt is bad, a debt free BTL is better...buy for cash, pick your tenants well and sleep well at night ......but second level thinking is to think for a moment how little sleep you'll get dumping all your cash into a single property in a single location with a single credit exposure to a single tenant with a single employer in a single industry.....your exposing all your cash flows on your capital in this way.....so a debt free BTL IMO exposes you to MORE risk than buying three properties at 66% LTV in different locations in different developments with different tenants in different industries with different employers.
It's the diversification of tenant risk, development risk & location risk..which is a no brainer IMO....that it enhances your cash on cash returns is the icing on the cake.
Does this add a little bit of extra property management into the mix? Are you taking some incremental interest rate risk?Absolutely but it drops the potential volatility of your cash flows way down while increasing your RoE...its diversification at its best....conservatively financed with importantly lengthy say 10yr fixed rate debt (no variable) the returns over the period could be predictable and very acceptable and far exceed equity index returns which sit in some cases at 99th percentile of expensive (SPY). If you were unlucky with one tenant in one property (non-payer essential PRTB squatter) your other two properties will keep producing cash flows which would keep the show on the road in terms of return on capital.
The alternative bear case reality.....a single BTL bought with 100% of your investable cash.....where the tenant goes PRTB squatter on you while physically destroying the underlying property before he/she leaves...is IMO a very risky proposition for what sounds like 100% of your liquid net worth (in fact I might suggest two BTL's consuming two thirds of your cash and 33% of cash in one ETF (non-US)).