Gross rent multiplier (GRM) is a measure used to evaluate the value of a commercial property based on the income it generates. It is calculated by dividing the price of the property by the gross annual rental income.
For example, if a commercial property is being sold for $1 million and it generates $100,000 in gross annual rental income, the GRM would be 10 (1,000,000 / 100,000).
GRM is often used as a quick and simple way to compare the value of different commercial properties, as it takes into account both the price of the property and the income it generates.
However, it is important to note that GRM is a rough estimate and may not always accurately reflect the true value of a property. It is typically used as a starting point for more detailed analysis and should be considered in conjunction with other factors, such as the location, condition, and potential for future income growth.
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