What is Price to Rent Ratio ?
The price-to-rent ratio is a fundamental metric in real estate that compares the cost of buying a property to the cost of renting it. It's calculated by dividing the property's purchase price by its annual rental income. This ratio helps prospective buyers and investors assess whether it's financially advantageous to buy or rent a property in a specific market. A lower ratio suggests that buying might be more affordable, while a higher ratio may indicate that renting is a more economical option. The price-to-rent ratio is influenced by factors such as market trends, property location, rental demand, and financing terms, making it a valuable tool for making informed decisions in the real estate market.
How to Calculate Price to Rent Ratio?
Price to Rent Ratio calculator uses Price to Rent Ratio = Median Home Price/Median Annual Rent to calculate the Price to Rent Ratio, The Price to Rent Ratio is a real estate metric used to compare the relative affordability of buying versus renting a property, calculated by dividing the property's purchase price by its annual rental income. Price to Rent Ratio is denoted by PTRR symbol.
How to calculate Price to Rent Ratio using this online calculator? To use this online calculator for Price to Rent Ratio, enter Median Home Price (MHP) & Median Annual Rent (MAR) and hit the calculate button. Here is how the Price to Rent Ratio calculation can be explained with given input values -> 16.66667 = 2700000/162000.