In real estate valuation, the Gross Rent Multiplier (GRM) is a method used to estimate the value of an income producing property based on its gross annual rental income. The multiplier is derived by dividing the sale price of a comparable investment property by its annual gross rents.
Once the multiplier is determined, it can be applied to another property by multiplying the subject property’s gross annual rent by the GRM. This approach provides a quick and simple estimate of value, though it does not account for operating expenses, vacancies, or financing costs.
