The sale represented a record breaking Gross Rent Multiplier
which equated to an immediate 4.5 percent Cap Rate and $152,857 per unit.
Relevant value indicators (price per unit, price per square foot and gross rent multiplier
) showed a range of $260,000 to $315,000.
An economic unit of comparison is provided by use of the gross rent multiplier
Valuation is often accomplished using a physical unit of comparison, such as a price per acre, or an economic unit of comparison, such as a gross rent multiplier
. Adjustments are applied to the physical units of comparison derived from the comparable sales, and then the units of comparison are applied to yield a value indicator for the subject property.
The five key variables that are evaluated by InsideRisk include affordability, unemployment, property crime, violent crime and gross rent multiplier
. These variables are categorized by five risk rankings: low, average, elevated, high and very high, explained Bates.
There also are some ratios that investors like to use, including gross rent multiplier
, or GRM (often used to value multi-family properties), the cash on cash ratio, the relationship between annual before tax cash flow and the amount of money the investor contributed from his own pocket, and the capitalization, or CAR rate which is the annual net operating income divided by the value of the property.
GRM Gross rent multiplier
. A rule of thumb for estimating the market value of income-producing residential property.
The traditional method of paying property management companies a percentage of income is analogous to using the gross rent multiplier
as an indication for determining value.
The 50-unit, fully-occupied apartment complex sold for close to record breaking pricing at over 16 times Gross Rent Multiplier
at an approximate 4% cap rate to a local New York City buyer.
The taxpayer's appraiser testified that the property would be valued between $204,000 and $255,000 using the gross rent multiplier
method, and the city introduced testimony that an investor had offered $185,000 to purchase the property.
The price per square foot of the property amounts to $203, the price per unit is $211,000, capitalization rate of 4.8 percent and a gross rent multiplier
where [V.sub.1] is appraised value via the income approach; [I.sub.1] and [I.sub.2] are demonstrable estimated monthly incomes (rents) for the two units; and GBM is the monthly gross rent multiplier
, the ratio of sale prices to monthly rent for neighborhood properties of similar type and quality, or