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Calculates gross rent multiplier (GRM) comparing purchase price to annual rental income. Quick valuation metric.
Formule
GRM = Purchase Price ÷ Gross Annual Rental Income
- GRM
- rough cap rate — rough cap rate
Stapsgewijze handleiding
- 1GRM = Purchase Price ÷ Gross Annual Rental Income
- 2Lower GRM = better value (lower price relative to income)
- 3Typical range 4-7; varies by market
- 4Quick estimate: 1 ÷ GRM = rough cap rate
Uitgewerkte voorbeelden
Invoer
Price $300k, rent $2k
Resultaat
GRM 150
Veelgemaakte fouten om te vermijden
- ✕Using annual income instead of monthly (must multiply)
- ✕Comparing across markets with different expenses
- ✕Using for expense-heavy properties
Veelgestelde vragen
Is GRM the same as cap rate?
No; GRM uses gross income (doesn't account for expenses); cap rate uses NOI (accounts for expenses).
When should I use GRM vs. cap rate?
GRM: quick comparison, residential; cap rate: accurate analysis, accounting for expenses.