<h2 id="a1b9c88d-d038-4d52-8d37-fa76023a3d11" data-toc-id="a1b9c88d-d038-4d52-8d37-fa76023a3d11">Introduction</h2><p>One of the tools I use in my real estate investment journey is the <strong>Gross Rental Multiplier (GRM)</strong> to give a rough estimation of whether buying a property to rent out could be a potential good deal.</p><h2 id="2b0b8ea2-c76b-4cf3-bf91-73087f99a614" data-toc-id="2b0b8ea2-c76b-4cf3-bf91-73087f99a614">Here's how it works:</h2><ul><li><p style="text-align: start">First, I take the property's price tag or how much it costs to buy.</p></li><li><p style="text-align: start">Then, I consider how much money it brings in every year from rent.</p></li><li><p style="text-align: start">Then I divide the property's price by its yearly rental income, which gives me the GRM.</p><p style="text-align: start"></p></li></ul><h2 id="964472a4-8580-4dde-b9d9-2ff5480dd4e5" data-toc-id="964472a4-8580-4dde-b9d9-2ff5480dd4e5">The formula:</h2><img src="https://letcheck.b-cdn.net/1097/clvlvwl2z0bt0n78z0c1mg52k.png" style="width: 100%; height: auto; cursor: pointer;"><ul><li><p><strong>A lower GRM</strong> normally means the property is a better deal - I am paying less for it compared to how much money it brings in through rent. Probably higher returns on my investment.</p></li><li><p><strong>A higher GRM</strong> normally indicates the property might not be such a great deal because I am paying more for it compared to its rental income. Probably lower returns on my investment.</p><p></p></li></ul><p>Once I have the GRM I can calculate different GRMs of various properties in a specific area and compare them. Overall, the GRM helps me as one of my tools, to have a rough and rugged method to see if a property is worth my time.</p>

One of the tools I use in my real estate investment journey is the Gross Rental Multiplier (GRM) to give a rough estimation of whether buying a property to rent out could be a potential good deal.

How I evaluate Rental Property Deals: THE GRM

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How I evaluate Rental Property Deals: THE GRM

How I evaluate Rental Property Deals: THE GRM

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