Value =

GPI =

EGI =

GRM =

EGRM =

A simple technique to estimate the sale price of investment real estate (often referred to as Effective Gross Rent Multiplier or EGRM). It ignores time value of money.

- Value: Value of the property (sale price).

- GPI: Gross potential income. This represents the rental income the property could produce if it were 100% leased, 100% of the time at full market rents.

- EGI: Effective gross income. Reduces GPI by the amount of vacancy recognized in the market.

- GRM: Gross rent multiplier. Estimates market value based on an estimate of gross potential income.

- EGRM: Effective gross rent multiplier. Estimates market value based on an estimate of effective gross income.

Given the purchase price for an income-producing property is $10 million and total potential income for that property is $1 million and effective gross income is $700,000, what is the gross rent and effective gross rent multipliers?

- Value: 10,000,000

- GPI: 1,000,000

- EGI: 700,000

The gross rent multiplier (GRM) is 10.0 and the effective gross rent multiplier is 14.3.

Value

GPI

EGI

GRM

EGRM

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Gross potential income

Effective gross income

Gross rent multiplier

Effective gross rent multiplier