Direct answer
What does gross rent multiplier mean?
A gross rent multiplier (GRM) is a factor that relates property price or value to gross rental income.
Exam cue: Apply the exact rental period supplied and use comparable market evidence for the multiplier.
What does it look like in a question?
Example
A monthly GRM of 120 applied to $4,000 monthly rent indicates $480,000.
Common exam trap
What should you not confuse it with?
GRM uses gross rent, while direct capitalization uses NOI.
Related valuation terms
AppraisalAn appraisal is an opinion of value developed by a qualified appraiser for an identified use, property interest and effective date.CapitalizationCapitalization is the process of converting income into an indication of value.ComparableA comparable is a property used as market evidence because it is sufficiently similar to the property being analyzed.Comparative market analysisA comparative market analysis (CMA) is a broker's analysis of relevant market data to help a seller or buyer consider a probable price range.Cost approachThe cost approach is a valuation approach that adds land value to the depreciated cost of the improvements.DepreciationDepreciation is a loss in property value from physical deterioration, functional obsolescence or external obsolescence in appraisal.
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