Gross Rent Multiplier

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Gross Rent Multiplier is the ratio of the price of a piece of a real estate investment to its annual rental income before expenses such as property taxes, insurance, and even utilities for vacation rental properties. Other expenses could include the cost of hiring a property management company. To sum up Gross Rent Multiplier it is the number of years the property would take to pay for itself in gross received rent. For the investor, a higher GRM (perhaps over 20) is a poorer opportunity, whereas a lower one (perhaps under 15) is better.

For a better measure of rental real estate value, use the Capitalization Rate ("Cap Rate"). The Cap Rate includes expenses in the calculation.