Housing P/E (Rent/price ratio)

[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?

[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?

[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.

[Kmzizzle]

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