Gross Rent Multiplier Flashcards
1
Q
What is gross rent multiplier (GRM)?
A
Ratio of the price of a real estate investment to its annual rental income before expenses such as property taxes, insurance, and even utilities for vacation rental properties.
2
Q
What is the formula for GRM?
A
Purchase price divided by gross annual rental income = GRM
3
Q
What is the formula if you’re given monthly rent amount and an annual GRM?
A
Take annual GRM then multiply that by 12. Always use annual figures when possible.
