With the first property buy, it's usually about putting down the money on a 'dream home'. But there are always a few strategy tweaks investors can do to get more out of their investments. Image Credit: Shutterstock

In the fluid world of real estate deals, the debate of buying a ‘dream home’ remains as contentious as ever. I would like to shed light on how to approach this age-old dilemma with a revised perspective, emphasizing strategic investment over mere acquisition.

Warren Buffett was once asked: Why do you share your investment strategies?

“Getting rich is a slow process, a few will copy me, but most are seeking get-rich-quick hacks,” is what he had to say. This wisdom applies directly to real estate investment, where the allure of purchasing a dream home often leads to financial overextension.

Many potential homeowners fall into the trap of buying more house than they can afford, justifying it by the belief that this is a lifetime purchase. They end up burdened by substantial down payments and bigger monthly mortgage payments. And they usually disregard the cost of owning such property, from electricity bills to the up-keep costs.

Don’t go with emotional buying

Furnishing the dream home becomes more about the housewarming party than it is about the financial future of the family. The crucial takeaway here is, this should not be an emotional decision, this is purely a commercial one.

Over-romanticising this decision often leads to grave mistakes, while the true goal of real estate investment is not merely ownership but generating stable income, protecting against inflation, and to be positioned for capital appreciation.

How should one navigate the complex real estate market to make the most of this single largest investment? The answer lies in strategic positioning and smart planning.

For families contemplating the purchase of a large villa, the advice is to reconsider. Opting for two smaller adjacent townhouses—one to live in and another to rent—this will create a sustainable financial model.

Think two

This approach has been a wealth generating hack for generations in the West. The multi-family duplexes not only help in covering mortgage payments but also distributes maintenance and up-keep costs across both properties, turning them into wealth-generating assets.

If you are single, I have a life changing hack for you - the co-living space. In Dubai, this has turned out to be most sought after by new expats. Purchasing a two-bedroom plus maid apartment and optimizing it for shared living, you can tap into high yielding and secure premium rentals. Especially for extra rooms like the maid's quarters, which surprisingly fetches the highest returns.

This strategy allows for an income-generating lifestyle, living for free, and leaves you with more money more in the bank to scale up.

For those who prefer privacy, instead of buying a comfy one-bedroom, opt for two studio apartments—one to live in and the other to rent out. Aim to furnish the extra studio and listing as a holiday home will fetch you even higher returns. This can ease the burden of mortgage payments and accelerate the journey towards financial freedom.

Yet, you might ask, when should one consider renting? I advocate for the ‘3 F' rule: if it flies, floats, or flaunts, it's better rented.

High-value assets like mansions or penthouses are more economically rented, offering luxury at a fraction of the cost of ownership. You might also ask, so who buys these trophy assets then?

While the ultra-rich may invest in this asset class as a good store of value, the focus for you should be on building wealth.

Remember, there is nothing romantic about your first home, it is only a stepping stone towards your dream home…