A Market Metric that You Shouldn't Overlook

[Tyler Kastelberg]

There is a common metric pro investors use to choose markets that many newbies overlook ... the gap between the estimated average mortgage payment and market rent

Rent vs. Own Gap = Avg. Estimate Mortgage Payment - 2 Bedroom Market Rent

When the gap between mortgage payments and rents widen, you'll see better qualified, longer term renters. Properties in these markets typically have lower turnover and a lower expense ratio.

When the gap between mortgage payments and rents contract (or turns negative), you'll see lower qualified tenants, a greater number of evictions, and higher expense ratios.

BP Community

1. Do you use this metric, and if so, what is your rule of thumb?

2. What is your favorite market metric?