With the property market still relatively high, it’s a common question – if I buy, should I live the home, or should I rent it out? It depends entirely on personal circumstances and there’s no perfect answer.

If you are going to live in the unit or house you purchase, there may be first time home buyers grants that make it more affordable. It’s worth researching this in your state. It may also be easier to get a mortgage as the bank might see you as less risky. And of course you have the satisfaction and security that comes from being your own landlord.

But renting also has its upsides. You’ll be creating a future income stream and building up your personal assets. And you may be able to benefit from negative gearing, depending on the rental income, total costs and your personal situation. But there are also costs involved. You may end up paying more to prepare the property and handle basic repairs. A tenant usually won’t put up with leaky plumbing or old gray curtains. Finding and manging a tenant can also cost money, and you may have some ongoing expenses like garden care. You should also make sure any potentially risky features such as stairs, pools or fences are property dealt with.

There’s also the financial planning angle to consider. Before you decide, evaluate how much of your wealth and savings will be tied up in one property and one type of asset. It may be worth talking to an advisor to understand what this means for you. For more on the pros and cons, and lots of other great advice about all the financial and legal considerations, check out this from Moneysmart.

And don’t forget there may be compromise options. Plenty of buyers choose to live in their first home or unit for a year or two, and then decide to rent it out. This could get you the best of both worlds.

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