Page 1 of 1

Housing P/E (Rent/price ratio)

Posted: Wed Jul 03, 2019 10:11 am
by international001
Hi,

Usually, P/E is higher for lower P (in the same area). My thought was that it had more overhead, plus there was some more risk involved (lower income people)

I was looking at some properties in some areas in Europe and I see this trend can be exaggerated (x2.5 P/E for a lower P house). Is this any indication of anything? Should I expect prices to go down in general?

Re: Housing P/E (Rent/price ratio)

Posted: Wed Jul 03, 2019 6:06 pm
by Vanguard Fan 1367
In a real life example I know of an appraised price of a commercial rental of 600K. The annual rent is 75k. What would you call the rent/price ratio of those numbers?

Re: Housing P/E (Rent/price ratio)

Posted: Wed Jul 03, 2019 6:50 pm
by international001
600/75= 8 (before any other costs). That looks attractive to buy

In Europe I'm seeing low P/E of 23 what is very low for buying

I'm talking residential. I'm not sure if commercial rentals are different.

Re: Housing P/E (Rent/price ratio)

Posted: Thu Jul 04, 2019 4:08 am
by Kmzizzle
Vanguard Fan 1367 wrote: Wed Jul 03, 2019 6:06 pm In a real life example I know of an appraised price of a commercial rental of 600K. The annual rent is 75k. What would you call the rent/price ratio of those numbers?
A 12.5% cap rate is awesome... I would take that in a heartbeat. And that 12.5% will lever up even higher with debt