Gross Rent Multiplier

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The Gross Rent Multiplier is the most common income multiplier used for appraising small residential income properties.  The GRM establishes a relationship between the Gross Monthly Rent with no deductions for vacancy or expenses with its value or sale price.

 

The gross rent multiplier is considered inferior to capitalization as a method of estimating value because it does not take into consideration unusual expenses.

 

The Gross Rent Multiplier (GRM) = Sales price (or value) ÷ Market Rent

 

The Gross Rent Multiplier (Annualized) = The Gross Rent Multiplier (GRM) = Sales price (or value) ÷ Annual Market Rent

 

Indicated value of the subject property = Subject's Gross Monthly Rent x Gross Monthly Rent Multiplier OR

Indicated value of the subject property = Subject's Gross Annual Rent x Gross Annual Rent Multiplier

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