Advertisement
If you have a new account but are having problems posting or verifying your account, please email us on hello@boards.ie for help. Thanks :)
Hello all! Please ensure that you are posting a new thread or question in the appropriate forum. The Feedback forum is overwhelmed with questions that are having to be moved elsewhere. If you need help to verify your account contact hello@boards.ie
Hi there,
There is an issue with role permissions that is being worked on at the moment.
If you are having trouble with access or permissions on regional forums please post here to get access: https://www.boards.ie/discussion/2058365403/you-do-not-have-permission-for-that#latest

Buying? Use the Price-to-rent ratio

  • 29-08-2014 2:23pm
    #1
    superman28
    Registered Users, Registered Users 2 Posts: 176 ✭✭


    There are alot of factors when buying a property, your family situtaion, job, location, affordability, etc etc.. but a fairly bog standard back of an envelope calculation to see if the property represents some kind of value is the Price-to-rent ratio. (I'm sure it's here already somewhere)

    Average list price / (Average Rent * 12)

    If your results are:
    • Price-to-rent ratio of 1 to 15 = much better to buy than rent
    • Price-to-rent ratio of 16 to 20 = typically better the rent than buy
    • Price-to-rent ratio of 21 or more = much better to rent than buy
    Just wanted to put it out there again as I can't make sense of the Bank Of Ireland calculator which doesnt actually tell me anything useful.

    https://personalbanking.bankofireland.com/borrow/mortgages/first-time-buyers/calculators/rent-vs-buy-calculator/


Comments

  • #2
    ballyharpat
    Registered Users, Registered Users 2 Posts: 1,833 ✭✭✭ballyharpat


    In a suburban area, that formula is beneficial. I use it for investment property as for the p/e for stocks. However, if I want to purchase in the country, or perhaps a house in a high income/class area, where mainly it is owner occupiers, then I have to realise that I am paying a premium for that privilege, as many people do not want to pay high rent as they may be saving for a house or may have other things in their lives more important than the property they live in eg vacations. cars, hobbies.....just my take on it.


Advertisement