what is grm in real estate

Best answer


Gross rent multiplier

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  • Why is the GRM important to real estate investors?

  • The GRM is important to real estate investors because of its usability and speed. The formula itself utilizes only two variables: rental property value and gross property income. There are several formulas in real estate investing, but almost none are as simple as the GRM.

  • How can GRM be used to estimate the value of property?

  • GRM can also be used to estimate the property value of an investment you are considering. If you ran the gross rent multiplier formula for a few properties and found an average, you could use that number alongside the annual rental income. Together, these variables would allow you to reverse calculate the property value.

  • What does it mean when the GRM of a property is high?

  • It probably indicates a problem with the property or gross over-pricing if the GRM is too high or low compared with recently sold comparable real estate. Investors who are actively seeking properties often have several on their radar.

  • How do you find the GRM of recently sold real estate?

  • You can get the GRM for recently sold real estate with this equation: Market Value / Annual Gross Income = Gross Rent Multiplier If a property sold for $750,000 with $110,000 annual income, the GRM is 6.82. Use GRM to Estimate Property Value

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