Do people rent (or only buy) nice big homes?

[Yoni Osteen]

Hi all,

So, I'm looking at buying a property in Deltona (suburban Central Florida), and the rental rate of the previous tenant was $1650, which makes sense for the property. It is a nice spacious 4 bedroom. 

My concern though is that many people wouldn't be able to afford it (this is high-rent Deltona), and if you are a family who can afford it - wouldn't you just buy? You can get a decent enough 4 bedroom in the area for $200k. 

My real estate agent hasn't led me wrong before, and she responded to this concern with "many renters are not able to purchase due to lack of credit and available cash reserves", but isn't that the definition of a risky tenant, and how many of those renters can afford high rent (this is 30% higher than the median rent for Deltona)?

I heard that there was data on what share of homes in an area are rented vs owned, so I thought that might lend insight, but don't know where to find that or how granular it gets.

Any advice would be appreciated.

Yoni Osteen

[Claudio Trevisan]

Great points! I always recommend buying the “median” for an area. Aka 3/2 1500sqft. But of course there can be exceptions if you find a good deal. 

To answer your question, yes, you can still find quality renters for bigger, nicer, more expensive homes. But your right, you may have more turnover because they have the ability to buy soon. 

The main problem is sustaining rent when the market crashes... its the expensive rentals that become vacant (or significantly drop rent). 

The median priced rentals are fine. That’s where most of the people who can’t afford there big homes anymore downsize to. 

Your best bet is to talk to a couple property managers and get their professional opinion on the specific location and property your considering