{"id":3993,"date":"2018-01-01T12:34:06","date_gmt":"2018-01-01T17:34:06","guid":{"rendered":"https:\/\/www.zolo.ca\/news\/?post_type=encyclopedia&#038;p=3993"},"modified":"2021-08-03T18:20:28","modified_gmt":"2021-08-03T22:20:28","slug":"gross-rent-multiplier","status":"publish","type":"encyclopedia","link":"https:\/\/www.zolo.ca\/blog\/glossary\/gross-rent-multiplier","title":{"rendered":"Gross Rent Multiplier"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">Gross rent multiplier is a calculation to determine whether or not a property is a good investment. The Gross Rent Multiplier compares the annual rental income of a property, before any expenses or deductions, with the cost of the investment (the fair market value or purchase price of the investment).&nbsp;<\/span><\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<div class=\"grammarly-disable-indicator\"><\/div>\n","protected":false},"author":22,"template":"","meta":[],"class_list":["post-3993","encyclopedia","type-encyclopedia","status-publish","hentry"],"acf":{"custom_title":"What is gross rent multiplier?","why_important":"<p><span style=\"font-weight: 400;\">Using the gross rent multiplier formula is a first assessment tool to determine value before deciding whether or not to do further research in appraising the property as an investment.\u00a0<\/span><span style=\"font-weight: 400;\">This form of valuation is only used when determining whether or not purchasing a home is a good deal.<\/span><\/p>\n<p>The calculation used to determine the gross rent multiplier is the market value of the home divided by the gross rental income. A\u00a0GRM of 3 suggests that the gross rent will pay for the property in 3 years, while a\u00a0GRM of 12 suggests that it will take 12 years to pay off the cost of buying the property using the gross rent.<\/p>\n<p>As a buyer, you are looking for a low gross rent multiplier. Gross rent multipliers under nine are good, whereas gross rent multipliers above 12 are not as lucrative of opportunities.<\/p>\n<div class=\"grammarly-disable-indicator\"><\/div>\n","examples_of":"<p>If a property has a market value of $700,000 and the annual gross rental income is $80,000 (which is nearly $7,000 per month), it&#8217;s gross rent multiplier (GRM) would be 8.75 and considered a good investment opportunity.<\/p>\n<p><span style=\"font-weight: 400;\">Example: $700,000 \/ $80,000 = 8.75 GRM<\/span><\/p>\n<p>&nbsp;<\/p>\n<div class=\"grammarly-disable-indicator\"><\/div>\n"},"_links":{"self":[{"href":"https:\/\/www.zolo.ca\/blog\/wp-json\/wp\/v2\/encyclopedia\/3993","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.zolo.ca\/blog\/wp-json\/wp\/v2\/encyclopedia"}],"about":[{"href":"https:\/\/www.zolo.ca\/blog\/wp-json\/wp\/v2\/types\/encyclopedia"}],"author":[{"embeddable":true,"href":"https:\/\/www.zolo.ca\/blog\/wp-json\/wp\/v2\/users\/22"}],"wp:attachment":[{"href":"https:\/\/www.zolo.ca\/blog\/wp-json\/wp\/v2\/media?parent=3993"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}