What comes first: An investment property or a home?

In fact, Mr O’Neill said advice from older and more experienced investors who say potential investors need their own home first should consider the fact that the property investment environment is much different than what it used to be.

“It's a classic mistake by the old school investors, they are basically giving the advice that worked in 1950 to 1980,” Mr O’Neill said.

“Back then, it was five times the average income to buy the average house. So of course, you go buy a house, you can afford it, you paid it off quickly, then think about investing.”

By comparison, Mr O’Neill said Sydney required 14 times the average income to buy an average property. With the current condition of wage growth being what Mr O’Neill referred to as “sketchy”, attempting to leverage 14 times an average income to buy house would mean “you're finished”.

In the popular states of Sydney and Melbourne, Mr O’Neill said buying an owner-occupier home before an investment does not make sense.

“Don’t buy your first home first unless you’re extremely confident that you’ve got a massive income that’s going to grow and it's going to be consistent, and then you can save a nest egg, because you’re not going to pay that house off otherwise, paying a million-dollar debt off these days,” he said.

“It's not impossible but it’s bloody hard, and I just don’t see how that’s possible these days.”

The biggest mistake Mr O’Neill says with potential investors who are also looking to buy into their first home in the Sydney market comes from those who overleverage themselves into a million-dollar home.

“Unless you’re on a big income, it’s almost like game over from an investment portfolio sense, you’re done until you pay some of that debt off and until you get pay increases, it’s going to be tough to get another loan,” Mr O’Neill said previously.

“So, they won’t even have the opportunity to get the investment if they go get that in the wrong order.”

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