Advice needed on kickstarting my Investment Plan

I am a beginner Landlord and would like some advice on the best way to
kickstart and expand my portfolio by using my current equity and savings to the maximum benefit.

I have quite a few options which is a nice situation to be in but also complicated, I really need to pin point the best action plan to start with in order to improve my portfolio in the best possible way.

I currently own a residential Victorian property in a very affluent area with an empty cellar which has great potential to be renovated.
- Property equity:40k - Mortgage:85k - Current mortgage rate:2.5% interest only - potential rent:£600PCM min.

My options:

1. Use current residential equity to convert cellar into a self contained one bedroom flat - cost: 40k - potential rent: min £400 PCM. Then flip the whole property into a buy-to-let and purchase a new residential property. So in affect I would have:

- 2 Bed Flat - 600pcm
- 1 Bed Flat - 400pcm
(Above being same property)
- New Residential Property



2. Purchase a buy-to-let property approx 80k putting down a 25% deposit (from my 30k cash savings) and also flip my current residential property into a buy-to-let property then seek a new residential property to live in.(Cellar conversion to be done at a later stage in the future).

- BTL Property - 550pcm
- 2 Bed Flat - 600pcm
- New Residential property

Any sound advice on the best plan of action to take very much appreciated.