I think the problem with this analysis is the assumption that rental units and owner occupied units are identical to one another.
In most places, rental units have more basic fixtures an amenities and tend not to be upgraded. It can easily cost of $100K to upgrade a kitchen or bathroom with high quality cabinetry and appliances. And this happens all the time with $1M+ units.
I have a house for sale in Mexico and I'm intentionally not renting it out. Why? Because renter occupied units are perceived by buyers as having more wear and tear and low-end than a place that's owner occupied.
In most places, rental units have more basic fixtures an amenities and tend not to be upgraded. It can easily cost of $100K to upgrade a kitchen or bathroom with high quality cabinetry and appliances. And this happens all the time with $1M+ units.
I have a house for sale in Mexico and I'm intentionally not renting it out. Why? Because renter occupied units are perceived by buyers as having more wear and tear and low-end than a place that's owner occupied.