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buying property in high or low rental/home-occupier areas...

Discussion in 'Real Estate' started by jscott, 12th Feb, 2006.

  1. jscott

    jscott Well-Known Member

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    Perth
    Wondering what fellow investors think are the pro's and con's of buying in area's with a high or low percentage of renters/home-occupiers? I've read in numerous places thats its an important characteristic to look at when purchasing but it never says whether its better having a higher population of renters or home occupiers.
     
  2. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    More renters = more competition for you when you are trying to find a tenant.

    More owner occupiers = (generally) better looked after houses which can lead to a higher overall value on the properties in the area. These areas are also often in demand by renters, since they are a nice place to live and harder to get in to (less turnover of houses since most people live there long term).

    Just a generalisation - but I prefer to buy in areas with higher percentage of owner occupiers.

    That being said, I also own some properties that are in relatively high rental areas - but they are close to a uni/hospital, so there's always demand for accomodation ... but perhaps at the expense of a greater turnover of tenants.
     
  3. Jacque

    Jacque Team InvestEd

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    Definitely stick to areas with more owner occupiers- much of this demographic information is publicly available on places such as Domain.com

    http://www.domain.com.au/Public/SuburbReport.aspx?searchTerm=2154

    or RPData

    http://reports.rpdata.com.au/cgi-bi...South+Wales&insuburb=castle+hill&inpcode=2154

    The theory goes, as Sim has indicated, that these areas are more likely to rise in value, as homeowners tend to renovate their homes and care more for them, as opposed to tenants.
    In suburbs which are more popular and close to amenities and desirable features (private schools, cafe cultures, shopping centres etc) demand is generally higher than supply, thus forcing upwards pressure on prices.
     
  4. Jacque

    Jacque Team InvestEd

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    A great example of this is currently in areas like Parramatta CBD and Ryde etc where it's unit city around the main hubs and landlords have trouble increasing the rents due to the larger supply.
    Sadly, this includes my IP in Gladesville, which is in a street which is almost all unit blocks. If I had the choice again to buy here, I wouldn't as the rent has virtually remained static (and has gone down) in the five yrs since I purchased. There is just an oversupply of both tenants and properties!

    Sticking to high owner occupier areas makes sense, in terms of both yield and capital growth.