Investors use a metric called Gross Rent Multiplier (GRM) as a screening tool Very simple number to figure. Purchase price divided by monthly (or annual) rent. The product is the monthly (or annual) GRM. If an apartment building is a million dollars and the apartments generate $8,333 per month in rent the monthly GRM is 120, the annual GRM is 10. Thus it would take you ten years to collect back in rents the million you paid for the building. You can get some, most, or all of your money back any time after the purchase by turning around and selling it for what you paid for it or more, provided you did not overpay for it going in. Of course, Dequavious, it is more complicated than my brief description. But GRM is a good place to start. I mean you’d have to be real patient about getting your money back to buy an apartment building with a GRM of 500, if you can get a competing one with a GRM of 120.
Investors use a metric called Gross Rent Multiplier (GRM) as a screening tool Very simple number to figure. Purchase price divided by monthly (or annual) rent. The product is the monthly (or annual) GRM. If an apartment building is a million dollars and the apartments generate $8,333 per month in rent the monthly GRM is 120, the annual GRM is 10. Thus it would take you ten years to collect back in rents the million you paid for the building. You can get some, most, or all of your money back any time after the purchase by turning around and selling it for what you paid for it or more, provided you did not overpay for it going in. Of course, Dequavious, it is more complicated than my brief description. But GRM is a good place to start. I mean you’d have to be real patient about getting your money back to buy an apartment building with a GRM of 500, if you can get a competing one with a GRM of 120.