The majority of people prefer to wait until after they have purchased their first and second home before they start to invest in real estate. Here are some things to be considered when making a decision.

Rent where you want to live A consideration when deciding to buy your own home or an investment property is location. Some people prefer to rent and live in a location they can't afford, and invest in an area they don't want to live with good rental returns. The income they receive from rent repays their mortgage while they live in a more desirable area.

A second source of income If you purchase a property for rental purposes, you will start making an income as soon as you find tenants. You can use this money to reinvest in the property or to pay off the mortgage and bills.

Negative Gearing and Captial Gains Tax When purchasing an investment property there are tax implications to consider. There may be negative gearing benefits to owning an investment property, however usually capital gains tax is payable on any profit from the sale of an investment property. Getting sound tax advice from a registered professional is recommended before making the decision.

Value adding Both property investors and homeowners can increase the value of their property through a renovation strategy designed to increase the capital value on a property. If this is done the right way, there are many financial benefits.

Your Lifestyle Once you have evaluated your financial options, it is important to look at how purchasing a home versus an investment property will have an effect on your lifestyle. Purchasing your own home will provide you with a financial base for the long term but there will be a reduction in your flexibility. It is essential that you know that you will be happy to live in a home for the medium to long term, because if you decide that the property doesn’t suit your lifestyle, you can tie yourself into a mortgage and then waste a lot of money on buying and selling costs.