Buy so that tenants can afford the rent?
We have talked about listing your ‘property criteria’ before and we have always talked about the size of the property and what tenants you would look at accommodating in the property.
There is another aspect to consider with this aspect though, and that is the income earning capacity in the area where you are buying. For example, if you purchase a property in Sydney CBD you can probably find a tenant earning top dollars (assuming the property is worth it) as opposed to purchasing a better property in the outer suburbs of Sydney where the average wage is lower.
Likewise if you decide to purchase in Gladstone, Queensland, consideration needs to be given to the average wage paid in that area and what typical rent could be paid by the tenant.
The point I am making here is that, taking Gladstone for example, you bought one of the better properties in Gladstone with 4 bedrooms and a pool, the number of tenants that could afford that rent would be smaller than the number of tenants that could afford to pay for a 3 bedroom home, no pool
You can see how by purchasing the right priced and type of property in a particular area can affect the number of applicants you may have for a rental property and could also therefore, affect the number of vacant weeks you may have in between tenants.
Take these facts into consideration so that if you decide you have $400,000 to spend you are buying in an area that has plenty of tenants who can pay the required rental you desire.
Filed Under: Property Investment Tips
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