One of the few tools which measure return is " years/purchase ratio " ( gross rent multiplier ). This represents the number of years of rent needed to buy the property at its current price. Eg : If the block of flats is offered for $ 1 million and it generate $ 100 000 a year in rent, it would take 10 years of gross rent of $ 100 000 to equal the offer price of $ 1 million. This ratio is used in a similar way to the P/E ratio ( price / earning ratio ). When the year/purchase ratio is high for particular property, either it is overvalued or the whole property market is overheated. Question : What value might represents fair / undervalued property?.