Is the 100 times rent still a good way to determine the value of a property?

It looks like properties are selling for over the 100 times rent in the area.

Thanks

It is probably all local. I’d say here it is 150. Monthly rent around $1600 for a house worth around $240,000.

I’d love to get $2400 a month in rent but that’s not happening in my hood.

This is SFH 1960s ranch

Very area dependent

MF 150+

I've never even heard of that calculation. Interesting.

Most houses here are under water as rentals unless you are doing short-terms. Luckily all of our properties were bought during the crashes. Nothing makes sense at today's prices.

The average home price is about $610k.

Average Rent by Unit Size

Studio: $1,000-$1250 per month

1 Bedroom: $1,300 – $1,770 per month

2 Bedrooms: $2,000 – $2,170 per month

Other people are too lazy to manually work the numbers, rent vs expenses including tax, insurance and mortgage. I would only use the x-times formula as a reference.

Here are some things to Know when buying Multi-Family Rentals.

A friend paid $338,000 for a 5 unit, using the income formula. Within 2 years they declared bankruptcy and had to give the property back to the bank.

I picked up that property from the bank for $169,00, a year later. Why?

No one before me factored in the following:

Central Hallway in a building with kids that used it as a play area. Owners had to pay a service to clean up the upstairs and downstairs hallways, plus the two stair cases and laundry room. At an additional expense of $250 per month.

Then this property had a Central Water Heater that the owner had to pay the gas bills. When the price of Natural Gas went up and each unit had more children, the monthly gas costs went from $300 to $3,200 per month.

This and the cleaning service wiped out all profit and cost the owners over $2,000 from their job income.

I removed the Central Water Heater and installed on demand water heaters in each unit and laundry room, saving me the $3,200 a month in natural gas. Tenants paid their own.

Also I replaced the hallway carpet with Flooring that was hard on feet without shoes, hard for kids to sit down, but easy to sweep.