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Updated almost 7 years ago on . Most recent reply

Patrick Charles's profile image
Patrick Charles's profile image
Patrick Charles
  • from Alsip, IL
  • Member since Mar 6, 2018
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Patrick Charles's profile image
Patrick Charles's profile image
Patrick Charles
  • from Alsip, IL
  • Member since Mar 6, 2018
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Patrick Charles
  • Alsip, IL
4
Votes |
9
Posts
Multi-Family and Apartment Investing

Gross Rent Multiplier: How Does it Work?

Patrick Charles
  • Alsip, IL
Posted

I'm new to commercial real estate. Can someone explain how the Gross Rent Multiplier works?

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Jairmiya St. Hilaire's profile image
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Jairmiya St. Hilaire
  • Financial Advisor
  • from TAMPA, FL
  • Member since Mar 25, 2017
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Jairmiya St. Hilaire's profile image
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Jairmiya St. Hilaire
  • Financial Advisor
  • from TAMPA, FL
  • Member since Mar 25, 2017
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Jairmiya St. Hilaire
  • Financial Advisor
  • TAMPA, FL
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Jairmiya St. Hilaire
  • Financial Advisor
  • TAMPA, FL
Replied

@Patrick Charles 

GRM= Price/ Gross Scheduled Rent.

EX- Price of 10 Unit Apt. Bld is $1MM. Rent per unit is $1,000 which equals $10k/Month or $120k/yr in Gross scheduled Rent. $1mm/$120K= 8.33 GRM

This means that at 100% Occupancy it would take you 8.3 Years to collect $1MM worth of income or another way to look at is it would take 8.3 Years for the property to pay off itself! 

Hope this helps Patrick!

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