Gross Rent Multiplier (GRM)

The Gross Rent Multiplier (GRM) in real property analyses provides only a general indication of value based on the monthly or annual income derived for a property, it is not relied upon like direct capitalization in the income approach or yield capitalization are in the income approach.  Operating expenses, vacancy and risk associated with an investment are not factors considered when value is indicated via a GRM.

A real property's Gross Rent Multiplier (GRM) is the ratio of a it's sales price to it's monthly or annual gross rental income at the time of sale.  Thus, the GRM is used to estimate property value by multiplying a known monthly / annual rental income times the multiplier.  Market derived Gross Rent Multipliers are often found to vary significantly.   

It is important to note that Gross Rent Multipliers should be derived correctly from the same property type and using the same market data from each comparable sale, notably the income used to calculate the GRM should only be total gross rental income. 

Contact us with your questions or concerns regarding the gross rent multiplier or regarding your specific appraisal assignment in Nevada at 1-702-568-6699.  We can also be e-mailed at grigdon@cox.net.  

Commercial Real Estate Appraisals in the Las Vegas & Henderson, Nevada Area.