Frequently Asked Questions
What is a good GRM?
It depends entirely on the local market. In low-cost Midwest markets, a GRM of 6-8 is common. In high-cost coastal markets, GRMs of 15-20+ are normal. Compare within the same local market.
How is GRM different from cap rate?
GRM uses gross rent before expenses. Cap rate uses NOI after all operating expenses and vacancy. Cap rate is more accurate but requires more data. GRM is faster and used for initial screening.
Can GRM be used for single-family homes?
Yes, but it is more commonly applied to small multifamily properties. For single-family homes, investors often prefer the 1% rule as the first-pass filter.
What does months of rent mean?
Months of rent = GRM times 12. It represents the number of monthly gross rent payments to recoup the purchase price. A GRM of 8.3 equals about 100 months of gross rent.
Does GRM account for appreciation?
No. GRM is a pure income metric. For long-term hold analysis, use an IRR calculator that incorporates expected appreciation and rent growth.
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Estimates for informational purposes only.
Important Disclaimer: Estimates for informational purposes only.
This calculator provides estimates for informational purposes only. Results are based on assumptions and may not reflect actual outcomes. Consult qualified professionals in relevant fields before making important decisions based on these results.