Should you buy an investment property or a family home first?

What should you consider when deciding whether you should purchase your first home or investment property?

April 2023 | By Fall Real Estate | 6 Minute Read | Tags: Guide, Buy

In this article

  • Considering whether you would prefer stability or flexibility when deciding to purchase an investment property or family home will help to inform your decision.
  • Investigating into which suburbs you can afford to purchase a property in will influence whether you would prefer to live there or rent in a more desirable area to suit your lifestyle.
  • Researching the rental yield, rental vacancy rates, properties' length on the market, and the area's general perception of the suburb you are thinking about purchasing can help you make an informed decision.
  • Looking at the potential cash flow and expenses of a rental versus a family home can help you decide which one is more affordable and beneficial to your situation.

In the past, people tended to marry young, buy a home and settle there for a few decades.


Things are not quite as simple now, particularly as Australian house prices have risen much faster than our incomes, and interest rates continue to climb.


The increase in house prices has made it increasingly difficult to enter the property market, so purchasing a property sooner rather than later seems more crucial than ever.


Suppose you want to purchase your first property but are still deciding whether to buy an investment property or a family home first. There are many things to consider when tossing between buying your first family home or investment property.


Ultimately, it depends on where life will likely lead you, including your current situation, financial circumstances and personal life goals.


The best option is to sit down and assess your goals, capabilities and restrictions, both personally and financially, to decide which path works best for you (an investment property or a family home).


To kick-start your contemplation, we’ve compiled the following factors to help you determine whether you should buy an investment property or a family home first.

Buy an investment property or a family home?

Stability vs flexibility

Some of us thrive in a predictable and stable environment. Having your own home that you can mould into the lifestyle you are after brings you excitement and vision for your future.


You may also love your current job, hope to have kids soon or are a bit of a homebody, so you might not have the need or desire to move around. Thus, purchasing your family home first could create the stability you seek in life.


On the other hand, if you are looking for your next adventure abroad, considering a career change or unsure of the future, the flexibility of living in a short-term rental could be the exact home you would thrive in.


Moreover, buying an investment property before your first home could allow you to maintain the flexibility you desire while still being able to enter the property market.


Either of these options will allow you to have a foot in the real estate door while still living your best life in an environment that suits your needs!

Area affordability

The area and type of property you can afford will most likely play a part in your decision for an investment property or a family home. For example, you may enjoy living in your current suburb, but it’s a little out of your price range, or perhaps where you want to move far exceeds your current affordability.


You may, therefore, come to the conclusion that renting where you want to be and choosing an area you can afford to purchase and invest in a rental property is the best option for you. Over time, your investment property could establish the equity you need to afford your dream location.


In contrast, if the area you want to live in is affordable and you can find the property you wish to call home, it may be the ideal time for you to purchase your first home while the house prices are within your price range.


Whether you want to purchase an investment property or a family home, the Southern Tasmanian real estate market is consistently changing, and the time to purchase your first property might be now!


Click here to find the ideal suburb to buy your first property, or search all our properties on the market in Southern Tasmania.

When considering to purchase a rental property, there could be an opportunity in a suburb you have yet to consider. By speaking with our experts about the suburbs our tenants prefer, we will ensure you are to date with the popular suburbs that will bring the highest rental yield.

Fall Real Estate

Investment opportunities

When considering an investment property, you should research the rental yield, rental vacancy rates, properties' length on the market, and the area's general perception when deciding whether to purchase an investment property or a family home.


If rental vacancies are climbing, tenants are in a more favourable position, and the rental yield may be less compared with a rental market with low vacancy rates creating a more competitive market. In this case, you may contribute this factor towards buying a family home as being more favourable in a less competitive rental market.


Similarly, if properties are for sale for long periods, it may indicate an overpriced market. Thus, waiting to buy your first family home and purchasing a smaller, more affordable investment property might be a better option for you. This will allow you to still enter the housing market while not needing to over-commit with your finances.


As you can envision, entering the housing market is the most crucial factor. Whether it is a rental investment property, a large family home, or a small unit, entering the market so you do not get left behind as prices increase will benefit you in the long run.

Cash flow

Calculating potential cash flow in an investment property is essential to establish if a particular property is a sound purchase.


If the gross income predicts to break even with or exceed your operating expenses (including mortgage, utilities, taxes and maintenance), you could be onto an excellent investment.


Who wouldn’t love some passive income or, at the very least, have the rental income cover your expenses?


If you cannot purchase an investment property that covers your operating expenses, you may find buying your first home is a more affordable option compared with paying for your own rent while having an investment property that does not cover your costs.

Tax benefits

Potential tax breaks should never determine whether you buy an investment property or a family home. Nonetheless, it is an area to consider when weighing up your options.


Purchasing an investment property can be hard work and costly. It will involve expenses such as insurance, bookkeeping, legal advice and agent fees. These investment expenses will be on top of your general costs as a homeowner, including loan interest, council rates, land tax, strata fees, repairs and maintenance and capital gains tax.


While these costs may appear daunting, they can offer many tax breaks to make it easier on your back pocket. For instance, building and appliance depreciation, as well as stationery, phone and travel costs can also contribute to tax deductions if you purchase an investment property.

"When you invest, the profits or returns you make may become part of your income for tax purposes. Many expenses you incur relating to your investments are deductible."

Australian Taxation Office, 2023

For more information about investments and assets and what you can claim, visit

Remember, no decision is ever guaranteed. Life doesn’t always go to plan, and circumstances and goals will change.


Your ‘forever’ home could become an investment, or after buying your first house as an investment property, you might decide it is perfect for you!


The key is to do your research, get professional advice, save for a house deposit, apply for a home loan pre-approval, and understand the offer process when you are considering purchasing an investment property or a family home.


For more information about purchasing your first investment property a step above the rest, read our informative article: A how-to guide for first-time property investors.

Disclaimer: The information on this website is not legal or professional advice and is general in nature; therefore, the editorial content or articles on this website are intended as a guide only and do not consider your personal objectives, financial situation or particular needs. For more information, please read our Terms of Use and Privacy Policy.

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