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Buying a home and an investment as one purchase. Why that's harder than it sounds.
I bought this property in 2014 to live in. I always knew it would become an investment eventually. That single decision cost me years.
There's nothing wrong with buying a home. There's nothing wrong with buying an investment. The problem shows up when one purchase is asked to do both jobs at once. As a buyers agent, I see this exact pattern with clients constantly, they try to make one address solve two different problems.
When I bought this property, I was choosing it as a home, somewhere to live, based on what suited my life at the time. Investment performance wasn't the filter. It couldn't be, because the criteria for a good home and the criteria for a good investment location aren't always the same thing.
I lived there for two and a half years. Looking back, there was no meaningful price growth in that area until 2018, four years after I bought it. Rental pressure in the background was already telling a different story, vacancy sitting around 6% in 2018 and tightening to 1% by 2021, but price hadn't been the reason I chose the location, so it wasn't the thing I was watching.
A home purchase is filtered on lifestyle and what suits your life right now. An investment purchase is filtered on location fundamentals, price pressure and rental pressure, being a small number of things that matter most. These filters don't always point to the same address.
When you buy with both objectives layered onto one decision, one of them ends up compromised, usually without you noticing at the time. You tell yourself the location works for both. Often what's actually happened is the lifestyle criteria won, and the investment case was accepted rather than tested.
That's exactly what happened here. I wasn't assessing this location against investment fundamentals when I bought it, because that wasn't the job it was hired for. It became an investment later, and it's done well since, but that outcome wasn't the product of investment grade location selection. It was the product of holding long enough for the fundamentals to eventually catch up.
This is precisely why I don't advocate trying to buy a home and an investment in the same purchase. Not because it can't work out, this one did, but because when it works out, it's easy to mistake good fortune for good process.
One trade-off deserves stating plainly. Buying two separate properties, one selected purely for lifestyle and one selected purely on investment criteria, means paying two sets of purchase costs and managing two separate decisions instead of one. That's a real cost. What you get in return is a location decision that was actually tested against the fundamentals that matter for an investment, rather than inherited from a decision made on completely different grounds.
If a property needs to serve as a home, choose it on home criteria and accept that its investment performance may be a byproduct, not a plan. If a property needs to serve as an investment, choose it on investment criteria alone, and don't let lifestyle preference quietly influence a decision that should be tested on fundamentals.
If you're weighing a purchase that needs to work as both a home and a future investment, which criteria are actually driving the decision?
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Disclaimer: The information in this article is general in nature and does not take into account your personal objectives, financial situation, or needs. It is not financial, legal, or tax advice. The Nelis Group accepts no liability for actions taken based on this content. You should seek independent advice from a relevant licensed professional before making any decisions and always confirm the latest rules and thresholds with your state revenue office or relevant authority.
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