"Affordable" College towns with "High" Price-to-Rent ratios

[Briana Landecker]

Hey BP community, I'm a new investor getting my bearings with market analysis. Hoping to invest in my first SFR or multi-family in the next 12 months. Looking at medium or LTR options, 2/1 or 3/2 value-add in a fast growing, "affordable" college town with a median price 310-450k that also has some good industry (1-2 corporate campuses that can draw job growth, academic hospital with a big travel clinician pull, etc). Obviously, "affordable" is subjective and riddled with challenges especially in this market.

I've been focusing on price-to-rent ratios. Struggling a bit with my analysis as the more "affordable college towns" are of course tagged as such because they are usually affordable to buy...thus lowering the price-to-rent ratio to below 15-20. Most of the markets that have a price-to-rent ratio of 20+ also have median home prices closer to 550k-650k or more. Of course price-to-rent  isn't the only metric I'm looking at, but if this is such an important one, I'm not sure how to balance affordability with high PTR ratio. Is it just a matter of continuing to search and analyze? Should I be looking at markets within markets (neighborhood to neighborhood). Or possibly looking at B and C areas (trying to avoid) to try to maintain that high PTR ratio? For experienced investors, what is your threshold for PTR?

Thanks all