Handeware
Investing

Rent to price ratio

10%
Rent for a year
$30,000.00

This is arithmetic for general information, not financial advice.

Rent to Price Ratio Calculator

See the yearly rent as a percent of the price. Enter the price and the monthly rent to get the ratio.

How it works

The ratio is the rent for a full year divided by the price, shown as a percent. A higher percent means more rent for each unit of price.

The ratio does not include costs, vacancies or financing. Use it to compare similar properties, not as a full measure of return.

Worked example

A property priced at $300,000.00 that rents for $2,500.00 a month, or $30,000.00 a year, has a rent to price ratio of 10%.

Questions

Is this the same as a cap rate?

No. A cap rate uses income after running costs. This ratio uses rent before costs, so it reads higher.

What is a good ratio?

It depends on the market and on interest rates. Compare it with similar properties nearby.

Why show a percent?

A percent makes two properties easy to compare at a glance.

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