Hi all
I have found a pontential positive cash flow area with fantastic opportunities for growth and new developments within the next couple of years. My only problem is that it has an average rental vacancy of 5.3% for houses and 3.8% for units. Is this too high do you think? A significant amount of the population are renters approx 46%!
Any suggestions or views would be greatly appreciated
ThanksIt is up there, but even so, you're the only one in a position to judge if you can 'hold' it for the time it needs to achieve the significant capital gains. If you still find it to be positively geared even with worst-case scenario vacancy rates, or if you simply allow for high vacancy rates in your planning you should be fine. However, if there are a lot of renters yet still low vacancy rates, I would be curious as to whether there is an oversupply of rentals, and if so, this may be keeping rents in check. There are a lot of issues to explore regarding the dynamics that may be causing this.
Is the area likely to receive an influx of new residents? Is that where you feel the capital growth will come from?
Hi There, the vacancy rate is on the higher side. Maybe you could do further research to work out which type of houses and areas are attracting long term renters, etc. You can do this by asking the agents. Try 2 or 3 different agencies and this should give you a good indication. You could also “beat” that average by buying a property that is already tenanted however has got potential for making the tenant happier (i.e Split system, carport, etc).
Happy Investing
Average vacancy rates are calculated over the long term – more importantly is what is the current VR, what was it 6 month/1 yr ago? & what competition by new developments is there?
Cheers everyone that helped out heaps and certainly gave me a lot more to think about
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