The trick is to check that the second hand home you buy has no major defects or repairs pending. Yet also you need to be critical of the older home's structural limitations, such as smaller kitchen size and storage spaces, checking they are at least able to be upgraded cheaply to the current generation's needs. Furthermore, an older home will rarely fit the current market taste. From an investment point of view this can be the one clear advantage of a new building. If the modern taste is for minimalist open plan housing with a stainless steel kitchen, then as a property speculator you can take profits by building to suit this fashion trend. But as the owner occupier you are not acting as a pure speculator, as you are buying your own home to live in for as long as you please, and when you sell to hopefully take profits. By then you can be sure that whatever '-ism' that was in then, is now out! Ask yourself; do you really think the next decade's home buyer won't be cringing at impractically white (minimalist), empty feeling (open plan) and cold (stainless) homes much as we laugh at orange laminex nowadays. 6. Overcapitalising. This is the biggest sin of people who think that their own home is their best investment. The famous example is the family pool, which might cost ten thousand to install yet actually turns away buyers that don't want the endless maintenance, or who prefer gardening to swimming. In short, avoid spending money on your home unless you really need to or if it is a prestigious area which will pay a premium for enhanced features. 7. Maintenance. Spending you shouldn't avoid , lest you wish to see your profits decay. 8. Me, my family and my dog. The final point necessary to repeat, is that your own home is primarily for you. Residential real estate profits are typically not driven by the buying habits of the average Australian family. Only those select buyers able to afford to pay a premium will buy 'position and quality'. You need to think carefully about your own needs before choosing your dream home on investment grounds. Moving from the suburbs to an inner city terrace could be a very profitable financial decision. But your dog won't love you for it.