Property price / rent ratio = property sell price / (rent/month * 12)
The property sell price = $200,000, rent per month = $1,500
The property price/rent ratio = 200,000 / (1500*12) = 11.1
The rent income will pay off the house in 11.1 years.
If the property price / rent ratio = 1- 15, buy the property right away
If the property price / rent ratio = 16 – 20, rent is better than buy a little bit
If the property price / rent ratio = 21 above, rent is much better than buy a property