It is better to borrow the money as you will have the interest write off available (check UK rules but similar to Ireland I imagine) against rent. Meanwhile you put the money to better use elsewhere, in savings, be that deposit account of whatever. Meantime house is being bought by the rent.
But you need to understand what being a landlord is about, it is not plain sailing.
The most important thing is the location of the property and the yield you can expect to achieve. I would look at capital appreciation as a bonus, if you buy at the right time (in a sellers market, as we have currently in Ireland) in the right place and have a good yield and know what it takes to be a landlord you can't lose.
Contrary to the 'policy' on AAM of interest only mortgages (due to the tax benefit) I would be for a repayment mortgage of not less than 20 years or less. Basically the mortgage to be paid off on retirement to supplement a loss of income when retiring.
I've been watching investment property in Ireland and yields are quite good now but I'm a bit wary of the Government's plans for property tax and the fact that they've reduced mortgage interest relief to 75% and I wonder what effect emigration will have on the rental rates which have come down in the past year. Buying in the correct location should prevent much of a downward pressure on rents reducing though. Also don't know what the glut of houses and Nama will have. In the UK market I wouldn't be sure what advice on these things you need.