Property Valuation
What is the 'gross rent multiplier' (GRM) and how is it calculated?
AGRM = Annual NOI ÷ Property Value
BGRM = Property Value ÷ Gross Annual (or Monthly) Rent; it provides a quick estimate of value relative to rental income✓ Correct
CGRM = Monthly Rent × Cap Rate
DGRM = Property Value × Vacancy Rate
Explanation
GRM is a simple valuation tool: divide the sale price by the gross rental income (annual or monthly). For example, a Nevada rental home selling for $360,000 with $2,500/month rent has a GRM of 144 (monthly basis) or 12 (annual basis). GRM is useful for quick comparison between rental properties but does not account for vacancy, expenses, or net income — it is a rough screening tool.
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