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Relying on Rentals – How far can you take it?

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  • Relying on Rentals – How far can you take it?

    Hi all,

    New Article tonight! First paragragh below and link to full article after that.

    If you are embarking on building a residential investment property portfolio you need first to look at the various risks relating to the types of rental income you are receiving. During the transition from one or two properties to multiple properties a different type of risk exists which can often cause lenders some concern. This is known in lending circles as being too rental reliant.

    This risk centres on the diversification and size of your property portfolio. It stands to reason that if you have a large portfolio of investment properties that is not concentrated in any one particular type of property or any one location that you are diversifying your risk within the property sector. For instance if you had your investment portfolio over a variety of different types of property, a downturn in tenant demand in one particular area, say for example apartments, would not necessarily have an impact on the other property types in your portfolio and therefore the risk of you experiencing a dramatic drop in your rental flows is reduced and a lender will more than likely be more comfortable in placing greater reliance on rentals when assessing your loan applications.

    Similarly where your portfolio is spread by location and type similar rules apply. Location might mean by suburb, by town of even by city.
    Link to Article->


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