The Gross Rent Multiplier
for Landlords

If you're in the market to purchase investment property, the gross rent multiplier (GRM) can be used as a quick and easy method for getting a "ball park" estimate of a property's value.

For small residential investment property, it is strictly a rough means for determining market value because numerous other factors affect market value with these types of properties. GRM is more commonly used for determining market values of large apartment complex properties.

In practice, the GRM is found by dividing the fair market value of the property by its gross monthly rental income.

Example:

An apartment complex is placed on the market at a price of $1,500,000. Its gross monthly rental income is $15,000.

The property's GRM = $1,500,000 / $15,000 = 10

If this property is being compared with another similar property for purchase, then the property with the lower GRM is considered the better investment with everything else being equal.

For more information about GRM and financial analysis, please visit The Landlord's Library book collection. It contains great information on the complete subject of residential landlording.

Return from Gross Rent Multiplier to Real Estate Cash Flow
and Financial Analysis