gross rent multiplier

Definition

A quick property valuation metric calculated by dividing sale price by annual gross rental income, used to compare investment properties. It's the back-of-napkin math real estate investors use before getting serious with cap rates and cash flow analysis.

Example Usage

With a gross rent multiplier of 12, the property priced at $600,000 should generate about $50,000 in annual rent to match market norms.

Origin

Real estate investment analysis terminology from mid-20th century

Fun Fact

GRM varies wildly by market—San Francisco might see 20+ while Midwest markets might be 8-10, reflecting different appreciation expectations.

Source: Real estate investment analysis standards

Related Terms

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Fair Market Value

A completely made-up number that everyone pretends is scientific because an appraiser with a clipboard said so. It's "fair" the same way a casino is "fair" -- technically accurate but someone always feels robbed.

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CMA

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off-market

Properties available for purchase that aren't publicly listed on the MLS or advertised to the general public. These are deals found through networking, direct marketing, or knowing someone who knows someone—real estate's version of insider trading, but legal.

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HomeStyle loan

A Fannie Mae renovation loan that lets you finance both the purchase and renovation costs in a single mortgage. It's for people who want to combine two stressful experiences into one convenient financial nightmare.

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sticks and bricks

The physical structure and materials of a property, as opposed to the land or location. It's what contractors care about and what investors try to look past while focusing on cash flow.

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price per door

The total acquisition cost of a multifamily property divided by the number of rental units, providing a quick metric for comparing deals. It's how apartment investors reduce complex investments to a single number they can text each other.

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