Gross Rent Multiplier Calculator
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.
Gross potential income
Effective gross income
Gross rent multiplier
Effective gross rent multiplier