My answer to that is : “The Middle Of The Market”.

The reason you should stay in the middle of the residential market is twofold. Firstly it is less volatile in terms of fluctuations in property values when compared to the higher end of the market, and secondly the quality of tenants is higher than the lower end of the market.

The high end of the residential market is driven by the demands of the wealthy. Generally speaking most wealthy people are in business of some form and as such their fortunes, and thus demand for high-end property, are directly tied to the state of the economy.

Another point to note is that the higher end of the property market usually has a very poor rent return when compared to the value of the property. Because anyone who can afford to rent an expensive home, can usually afford to buy their own! As such, there is less demand for expensive rental properties and vacancy periods are also longer. So stay away from there!

Interestingly enough if you want to live in the big end of town, you are even better off renting.

At the lower, or cheaper end of the market, you are more likely to find your tenants from hell. Now I say this very carefully, because in no way do I intend to say that all poor people are bad tenants. I am just saying that bad tenants are usually poor!

You see, if someone is a tenant from hell they possess two negative qualities as a person. The first is lack of respect for authority, namely the tenancy agreement they signed. The second is a lack of respect for other people’s property, namely your house.

If a person has that sort of attitude, what line of work do you think they will be in?

Who is going to give them a high paying job? Chances are that they will be renting in the lower end of the market. Stay away from the lower end of the market and you stay away from tenants from hell. (The only exception to that rule may be a highly paid rock band!)

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