The 100x monthly rent is a rule of thumb. As with all rules of thumb, it is fairly gross and is actually dependent on a number of factors. A primary factor is interest rates.
For example, a property for which monthly rents are 100x the purchase price corresponds to gross rent of 12%. In a world where CDs are paying 5% that would be a screaming bargain for a SFR. If interest rates climb to 15%, it would no longer be a bargain and an investor would expect more like 60x or 75x the monthly rent in a 15% interest rate world.
In my opinion the bottom for SFRs to make sense from an investor standpoint could lie between 60x to 150x monthly rent depending on interest rates at the time. I would not use this factor alone to decide when to buy.
Best thing to do is to run today’s prices at today’s interest rates. Then see what a 1% change in rates does to you and assess then likelihood of that happening. At today’s interest rates, prices are still about 20% higher than where I would buy as an investment (Central SD).
