Depends on your situation - but in mine - both!
I own a house in Melbourne, and have rented it out. Live (rent a property) in a completely different part of the city.
There are several benefits to this:
1/ Financially better off: By using negative gearing (using a loss on a investment property to offset/reduce the amount of tax I pay), I get a hefty tax return - and am actually turn out to be better off.
2/ Location: Regardless of where my house is (the one I own), I have the flexibility of living anywhere. This rocks.
3/ Rent: The rent I get for my property covers the rent I am paying out (roughly). We (my partner & I) also have a couple of rooms rented out, we actually end up better off money wise.
The main disadvantage, is that we can't treat our rental place as our home - i.e knock down walls, and make other modifications to it. But as long as you get a nice place, this isn't an issue.
Gesta Non Verba
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