Build equity before investing or invest to build equity?

[Jessica Ewanic]

My partner and I have been discussing buying a home in the next year or so. I've always felt like I wanted to invest into a property that I can make work for me before diving into my own personal home outside of investing but my partner is thinking to buy a home to build equity before pulling the trigger on an investment property. What are pros and cons of each? Is there a clear-cut winner when first starting out?

[Crystal Smith]

Quote from @Jessica Ewanic:

My partner and I have been discussing buying a home in the next year or so. I've always felt like I wanted to invest into a property that I can make work for me before diving into my own personal home outside of investing but my partner is thinking to buy a home to build equity before pulling the trigger on an investment property. What are pros and cons of each? Is there a clear-cut winner when first starting out?

If you live in a market that has multifamily properties then you can have your cake and eat it too.  It's how I started out. I purchased a 2 flat, lived on one side, then rented out the other.  Eventually moved out and cashed flow the entire building.

If you're talking about purchasing a single-family home then my opinion is to pull the trigger on a single-family home to either flip (renovate then sell)  or buy, renovate, rent, and refinance.  

Pros Forced appreciation and equity much faster than the slow build-up over time.  When considering inflation and the time cost of money you'll put cash in the bank faster than just purchasing a home to live in and building up equity.  The home will also cash flow which is money you can spend or save now

Con- It's not risk-free and you have to do your homework to find the right property; understand what has to be updated to get the value you want; find the right contractor or handyman,  tenant, .....

Regarding just purchasing a home to live in to build up equity

Pro- All homes, even in the worst neighborhoods, go up in value over a period of time

Con- Your personal home does not cashflow; ie. put cash in the bank on a monthly basis