Enter the total home price and the average monthly rent into the calculator to determine the price-to-rent ratio.

Price-to-Rent Ratio

The following formula is used to calculate a price-to-rent ratio. 

P:R = HP / R*12
  • Where HP is the total sale or home price ($)
  • R is the monthly average rent ($)

To calculate the price-to-rent ratio, divide the total sale price by 12 times the monthly rent.

Price-to-Rent Ratio

A price-to-rent ratio is a proportion of the total home price to the annual rent that could be generated from the home. The lower the ratio the better it is to buy a home. The average P-R Ratio is 16-20.

Price-to-Rent Ratio Example

How to calculate price-to-rent ratio?

  1. First, determine the median home price.

    Calculate the median or mean home price of the area.

  2. Next, determine the average monthly rent.

    Calculate the average monthly rent for the area.

  3. Finally, calculate the price-to-rent ratio.

    Calculate the price-to-rent ratio.

FAQ

What is a good price to rent ratio?

On an average price to rent ratios linger around 16-20. Anything lower suggests that rent is high in the area and anything higher suggests rent is low.