CASE STUDY # How to Use the Gross Rent Multiplier for Estimating the value of Apartments The Gross Rent Multiplier (GRM) is a ratio to estimate the value of Income producing properties. Only two pieces of financial information are required to calculate the Gross Rent Multiplier for a property: the sales price and the total gross rents possible. EXAMPLE 1: If the sales price for a property is $400,000 and the annual potential rental income (assuming full occupancy) for a property is $50,000, the GRM is equal to 8. Sales Price / Annual Potential Gross Income = GRM $400,000 / $50,000 What is the GRM? If several similar properties in the same area sold recently, and their average annual GRM was 8, you could use this information to estimate the value of comparable properties for sale. If the yearly potential gross income for a subject property is equal to $60,000, you could estimate its value using the following formula: GRM X Potential Gross Income = Estimated Market Value (EMV) 8 X $60,000 = $ What is the EMV? $ COPYRIGHTO 2013. ALL RIGHTS RESERVED.COMMERCIAL REAL ESTAT