Your Home to Live In Should Be the Last Property You Buy, Not the First

I'm a big believer in this. The home you buy to live in should be the last home you buy. Not the first.

I know that goes against what most people think. The common belief is that buying your own home to live in is the property. The one that matters. Everything else comes after, if it comes at all. But I think that thinking has it backwards, and it's costing people a lot of wealth they never end up building.

Think of your borrowing power as a jar

If you buy your own home to live in first, that's a big rock going into the jar. It takes up most of the space straight away.

Your borrowing power isn't unlimited. Banks look at your income, your expenses, your existing debt, and they land on a number. That number is the jar. And a home to live in, especially the kind most people want to live in, is a big rock. Once it's in there, there's not much room left for anything else.

That's the part people don't think through. They're not just buying a house. They're using up most of the capacity they'll ever have to buy anything else.

What happens if you fill the jar differently

Now flip it. If you hold off on the home you live in and buy investment properties first, you're not dropping one big rock in. You're filling the jar with smaller ones. Cheaper properties, properties that still perform, but don't swallow your entire borrowing capacity in one go.

That matters, because those properties don't just sit there. They grow in value over time. And while they're growing, they're also earning you rental income. So you've got two things working for you at once. Capital growth building your equity, and rental income supporting your ability to keep borrowing.

There's a tax difference too, and it's a big one. When you buy a home to live in, every dollar of that comes from your post-tax income. You've already paid tax on it, then you pay for the home on top. When you buy an investment property, the interest on that loan is tax deductible. That changes the maths on what it actually costs you to hold.

And the rental income does real work here. It helps cover that interest and the holding costs, which means the property is largely paying for itself. That's what actually improves your borrowing power over time, because you're not the only one servicing the debt. The tenant is helping. Which means you can go and do it again.

A home you live in does none of that. No tax deduction. No rent coming in. It just costs you money to hold, funded entirely out of income you've already paid tax on, and you're hoping it grows.

Why this actually gets you to a better home, faster

Here's the part that people miss. This isn't about giving up on the idea of owning your own home. It's about sequencing.

If you spend those early years building a portfolio of investment properties instead of locking up your borrowing power in one home straight away, those properties do the heavy lifting for you. They grow. They generate income. And down the track, that equity and that income is what actually lets you buy a bigger, better home than you could have afforded buying first.

You end up in a stronger position, in a better home, because you let the investment properties build the wealth first instead of trying to do it all at once with one big purchase.

The trade-off

I won't pretend there isn't one. Buying investment properties first means you're renting for longer, or staying in a smaller place for longer, while your own dream home waits. That's not comfortable for everyone, and it's a genuine trade-off, not a trick.

But if the goal is actually building wealth, not just owning a home as fast as possible, this is the sequence that gets you there. The home to live in isn't the first move. It's the reward at the end of doing the other moves right.