Question:
How do you determine the GRM for a 4-Plex property? or for the inland empire area?
-W.A.
Answer:
It’s the same thing. The GRM is basically the Gross Rent Multiplier. Just look at other 4-plexes in the area, figure out what their rents are, the total yearly rents. And figure out what it sold for. If it sold for $200,000 and the yearly rents are $20,000, that would be ten times gross. Just divide the total purchase price by the rents, by the market rent, and that’ll give you the GRM. That’s for any area. Just look for comps within that area.