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

Question

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 · Answer

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

David Pierce · Answer

Lord. I hope your Realtor is getting better pictures.That is a big house. I am coming up with a little more rent for that property. Like $100 a month.

But on your analysis stick with the $1,650.

Is there a fenced back yard?

David Pierce · Answer

$1,650 is not really that high of a rent for a 4BR in Deltona. I manage some properties there.

It is a very good rental market. People tend to stay a longer time.

People rent in that range because they 1.) Prefer to rent 2.) They cannot qualify for a mortgage.

Just because someone has bad credit does not mean they will be a bad tenant. Credit can and does get destroyed by 1.) Medical debt 2.) Divorce 3.) Student Debt 4.) Bad money management 5.) Etc. Not just because someone does not pay their bills.

The number one way to maintain and increase your ROI is finding the right tenant. That takes skill and knowing the market too. (For example 70% of renters here have pets. So accept up to 3 dogs, get pet rent, etc.)

What is the ballpark price if I may ask?

Theresa Harris · Answer

Your realtor has good points. There are many reasons people prefer to rent or rent instead of buying: they don't have money for a down payment, they have poor credit or they only plan on staying in the area for a few years.

Look to see what other rentals exist in the area and get an idea for how much it would rent for and if there are a disproportionate number of homes in certain price points that aren't renting.

Yoni Osteen · Answer

Thank you @Claudio Trevisan, @Theresa Harris and @David Pierce. great advice!

David - Sure, the price point we are at right now is $245k. It looks neither newly remodeled nor outdated. It’s listed here: https://www.zillow.com/homedet...

Cheers :)

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

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

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