RE:house on rent or own
by Deepak Jain on Apr 30, 2007 05:55 PM Permalink
I think there has been a fundamental error in this analysis by comparing expenses to capital costs and no mention has been made on the terminal value of the property in the second scenario. A more suitable analysis is comparing the rental yields to sales value to ascertain wheather the sales values are optimum or not...typically rental yields should be 5-7% of the total purchase price...if less...then the property is overpriced...if more then underpriced...yield is your annual net rent divided by total purchase value.
