Q. I have saved up a 20% deposit as you recommend and want to know whether I should buy a home or an investment property?

Here’s a question I was recently asked that I thought was a good topic to share with my blog readers.

When deciding between buying an investment property or a home you really need to look at your short, medium and long term goals. From a financial, wealth accumulation perspective, in 99% of cases you are going to be better off buying an investment property.

One of the main reasons is the significant taxation benefits you gain from an investment property that are not accessible for home mortgages. It’s also important to note that it’s usually cheaper to rent where you want to live than to pay off a mortgage for a comparable property in the same location.

So if you’re trying to build up an asset base then for most people I recommend starting or building up your property portfolio as it will allow you to move ahead faster financially when compared to buying a home as your first property purchase.

If however, after weighing up all the pros and cons (and there are many) you decide to buy the family home then make sure that you know what your family requirements are going to be for the medium to long term and ensure that the property you buy will cater for them.

You don’t want to be wasting tens of thousands of dollars in selling and buying costs in a few years time because you didn’t put enough thought and planning into your decision.