Comparing suburbs variables when deciding where to buy

[lila77]

I have been doing some research to decide where I should be focusing my efforts for buying my next investment property.
Of course there are all the standard variables to compare eg. vacancy rate, stock on market (incl. DSR), changes to household income, increases to rent, days on market etc.

The one variable that I'm not sure I understand how it effects my decision to buy a property as a rental is the number of properties that are currently rented in an area. For example I have been looking at 3 suburbs 2 are nearly identical in terms of median house price (one is a little higher), median rent, rental yield (given one's house price is slightly higher it has a very small reduction in yield). However the biggest variable is the % of houses that are currently rented. One has a % rented of 16.3, whilst the other is 23.9%. The third suburb has a higher med house price, higher median rent, same rental yield but the number of properties rented is 30.2%.

All suburbs are approximately the same distance from the capital city, all have very good facilities in terms of shops, schools and other infrastructure, they all neighbour one another.

 

[MTR]

Funny, I never really look at the stats you mentioned that closely.

I focus on selling time in areas of interest, how long on the market??

How much stock in this particular market, oversupply???? I try to buy in a tight market, low stock, high demand.

Median house price of the area and surrounding median house prices, try to locate areas where there are much higher median price.

 

[lila77]

Funny, I never really look at the stats you mentioned that closely.

I focus on selling time in areas of interest, how long on the market??

How much stock in this particular market, oversupply???? I try to buy in a tight market, low stock, high demand.

Median house price of the area and surrounding median house prices, try to locate areas where there are much higher median price.

Yes I mentioned these variables as the ones everyone looks at (including me!) but it would be interesting to see if % properties rented is a variable to consider. One of the other variables I forgot to mention is that the average income for the area with the lowest median price and lowest %rented also has the highest income (by approx. $90 per week). Which I guess makes sense, this population were probably more likely to be able to save a deposit to buy but the extra $5-20k to buy in the other slightly more expensive areas was perhaps a little out of reach.

What if I bought in this area and found no-one really wants to rent there? Or is it that people are happy to rent there but there just aren't that many investment properties on offer to rent?

Would be interested in other peoples opinion or expert knowledge on how %rented effects rental properties.

 

[Spades]

That's why you look at comparables,no use looking at an apple when it becomes a lemon,all things considered.

 

[Scott No Mates]

Median mean zip unless you know what the statistics include or have done it yourself.

A low % of rentals points to high desirability for owner occupiers. Also points to opportunity as rentals are harder to find.

 

[MTR]

Can also have a mix, depending on the product

Desirable inner city areas where most will be high income owner occupiers - homes that is. Many want to live in these areas but entry level too high - so in the main it will be renters for units/apartments.

 

[MTR]

.What if I bought in this area and found no-one really wants to rent there? Or is it that people are happy to rent there but there just aren't that many investment properties on offer to rent?

.

I just contact property managers at least 3 and find out this way, if they are flying out the door you know there is a demand, also get an idea on what is in greater demand and rental income of course