diff --git a/lib/dao.js b/lib/dao.js
index 50a0c273..35a79244 100644
--- a/lib/dao.js
+++ b/lib/dao.js
@@ -393,7 +393,7 @@ DataAccessObject.updateOrCreate = DataAccessObject.upsert = function upsert(data
         function done(err, data) {
           var obj;
           if (data && !(data instanceof Model)) {
-            inst._initProperties(data);
+            inst._initProperties(data, { persisted: true });
             obj = inst;
           } else {
             obj = data;
diff --git a/test/manipulation.test.js b/test/manipulation.test.js
index 875ccf18..16eddd97 100644
--- a/test/manipulation.test.js
+++ b/test/manipulation.test.js
@@ -567,6 +567,15 @@ describe('manipulation', function () {
             });
         });
     });
+
+    it('should allow save() of the created instance', function(done) {
+      Person.updateOrCreate(
+        { id: 'new-id', name: 'a-name' },
+        function(err, inst) {
+          if (err) return done(err);
+          inst.save(done);
+        });
+    });
   });
 
   describe('findOrCreate', function() {