% of renters in a suburb

In buy and hold strategy, what is min and max % renters in a suburb before it goes in shortlist of suburbs.

 

Sub 10% is a tight owner occupier market. 10-20% is a nice mix, 20+ is a bit slanted towards investors where there will be much more competition to attract tenants. In these markets you want to present a quality rental to get the best tenants.

Some example SA suburb stats

Ingle Farm: 14%
Paralowie: 16%
Salisbury North: 20%
Elizabeth Downs: 26%
Elizabeth North: 31%

Time to lease is certainly quicker and growth stronger in the more owner occupier centric suburbs

 

You've beat me to it Dave - perfect examples. I don't think there's a right or wrong amount - it is just a variable at play along with all the other components of analysing an investment. In generally however I think there's value in keeping to those areas with a mix between owner occ/investment - ie the 10-20% range. This means the area is still on the radar for renters to consider (and compete over) leading to reasonable rental demand, whilst as @DaveM has identified the higher renter % areas will mean you need to provide quality stock to avoid vacancy or reduced rental return.

What I think is more important is looking at vacancy rates for a suburb, LGA and city as this will determine how the rental market is performing and whether there is any flow on relationship with the capital values - look at Perth's explosion in stock in recent history which resulted in growing vacancy rates and falling capital values.

 

The area matters too. 30% owner occupiers in say a CBD high rise would already be considered quite high.

 

Yep exactly. And that's why I've pointed out in our suburb reviews previously about the relationship between owner occ levels and vacancy rates.

If that ratio is dropping and vacancy rate is rising then that's a very good sign of the suburb being over subscribed by investors. Vice versa as well which means investors haven't infiltrated the area yet and CG might benefit from their wave.

 

Thanks I was i had a wrong assumption that every one looks for 30% and above.

Is there a better place to source this data from other than census ?

 

Try investar or sqm

 

Thanks @D.T.

 

I looked at sqm and it is showing 2011 census data too

 

realestateview site has these stats..

I've aimed for 10-20% but I only buy in estates where investors are limited to 10% or less. Less rental competition, nicer suburb in general. I like owner occs. More emotions involved and people are always lookin for a place to own a home.. Worked well so far either way.. I know others who have gone 30-40% investors..I think it won't matter too much either way.. know people who have made huge money in both suburbs.. I doubt too many suburbs closer to cbd would be high owner occ yet you'll find good growth..

 

I owned in a highly OO suburb in Sydney. We realised the home wasn't viable as an IP - 2.5% rental return, rents just didn't reflect the value of the asset. Plus there wouldn't have been much depreciation (house over 40 years old), plus substantial land tax. So when we found a new home to live in, we sold this one.

On the flipside, I own an IP in a complex of 36 and I think all are rented out bar 1. But it's a tightly held block, great location (walk to unis, walk to trains, walk to the city), they rarely come on the market. Because of how I let it out the rental return on current price is around 7%. So look at your yields and buyer demand (and supply too)