Question re Price to Rent Ratio for Buy and Hold Investor

[Jon Catterson]

Chad Carson, in his Real Estate and Financial Independence podcast episode 41, said that he did a lot of his investing in properties with a price to rent ratio between 5 and 8. I cannot recall if he indicated those were for flips or buy and holds, but considering he holds many rentals, I'm going to assume some of those were for rental properties.

I therefore thought low price to rent ratio is better. But then, reading an article on price to rent ratios, it said that the higher the ratio, the less sense it makes for a prospective home buyer to buy a home. If the ratio is too high, it makes more sense for that person to rent. Considering I want to be a landlord, shouldn't I want a high price to rent ratio? 

Using an extreme example, if I own a property in San Francisco CA, it can rent out at a very high price. If I own where all the for sale property is relatively cheap, my potential customers might just go ahead and buy instead of renting from me. 

So, my question is what is better for a buy and hold investor - a high or low price to rent ratio? 

[Ellis San Jose]

The caveat I qualify "yield & risk" argument is that it applies in an "efficient market". I have made many high yield returns with a lower risk because of the inefficiency of the market.