NSW What percentage of OO vs Rental is ideal?

Hi guys,

Thoughts on the topic?

What would you seem the best for an IP on a suburb?

80/20 owner occupier to rental?
Or vice versa? Or somewhere in Middle?

Is a 60/40 OO to rent clarified as good or bad? Considering there's more competition. Vacancy rates below 2%

Pros and cons to each?

 

There are not many places

It's important, but I wouldn't worry too much about anything above 60% I'd think is fine if everything else checks out.

To give an example of OO stats:

Malvern VIC: 66.7% in 2016 or Cranbourne VIC: 66.2% in 2016
Toorak VIC: 61.7% in 2016 or Tullamarine VIC: 62.4% in 2016

The OO % are effectively the same, yet those two areas are on complete opposite ends of the spectrum in terms of desirability, amenities, proximity to CBD, income levels, median price, median rents, etc.

It's just to show that above a certain point, there are more important factors than OO levels.

I'd be happy with something above 60% OO.
Anything less than 50% then I would have some concerns, doesn't mean you can't still find something though if other factors are good.

 

Just be aware that the mix of OO/IP can change, sometimes quite quickly.

 

Its going to vary a little in different areas - what is high in one area is normal in another.

Here in Adelaide 1/3 : 2/3 is a good start, with further investigation needed on other KPIs / metrics. Ie can extend a bit if something else is great.

 

Definitely true, was reading articles and people's opinions on it. And it varied so much. Like in the end, does it really matter that much?

 

As others have said, this is going to vary on a location-to-location basis but a general guide is 80/20 - 70/30 (owner occ/rented) but look at all the metrics too.

It would definitely matter for the long-term, depending on your exit strategy. I like to buy in areas primarily dominated by owner occs as when the time comes to sell, you'd want to appeal to a home buyer who will be willing pay more due to the emotional connection, rather than to another investor who is simply looking at the numbers.