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Often I am asked this question and surprise clients with my answer – Both. What most clients don’t realise is that it is possible to achieve both, depending on whether or not you’re willing to put in the hard yards of course. To do this a client could purchase a property that only requires a cost effective renovation, adding value to it and then after a little while leverage towards investing.

Accessing this newly created equity from the renovated property could give you enough for a deposit and cost associated with buying the investment. In this instance, government bonuses (first home buyers grant) and stamp duty concessions can be taken advantage of.

Here’s an example

James and Sarah recently purchased a $500,000 property in Sunshine. They borrowed $450,000 having put down a deposit of 10% plus purchase cost. They also had $25,000 saved as their renovation budget.

After giving the property a facelift by knocking down a wall to open up a tight space, putting in new light fittings, new paint, kitchen and a landscaped garden their property was revalued at $570,000.

James and Sarah were then able to increase their loan up to 90% of the revalued property worth of $570,000 giving them access to $63,000 in equity. This equity was then used for the 10% deposit for the investment – a property up the road from them so they could self-manage and regularly drive pass to keep an eye on.

Whilst this strategy is considered a good one, it isn’t for everyone. Some may not be in a position to afford the holding costs on their own home and an investment property. Others may prefer to live at home or rent while investing.

One way or another – buying a first home and an investment property is possible!

For an honest and unbiased opinion, talk to Think and Grow Finance today on 03 8390 5855 or email