A property sells for $220,000 and generates monthly rent of $1,600. What is the Gross Rent Multiplier (GRM)?
Correct Answer
B) 138
The Gross Rent Multiplier (GRM) is calculated by dividing the property's sale price by its monthly gross rent: GRM = Sale Price ÷ Monthly Rent = $220,000 ÷ $1,600 ≈ 137.5, which rounds to 138. The GRM is a quick valuation tool used in the income approach to estimate a property's value relative to the rent it generates. A lower GRM generally indicates a better investment relative to rental income. It does not account for vacancies, expenses, or financing.
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