There are (4) financial indicators used to assess Commercial Real Estate Multi-Family Properties:
- Price per Square Foot
- Price per Unit
- Cap Rate
- GRM (Gross Rent Multiplier)
Of these (4) financial indicators, the Gross Rent Multiplier is one of the most effective tools used by investors and professionals in the industry to quickly review and conduct comparisons of various investment properties.
The Gross Rent Multiplier = Sales Price (Market Value) / Gross Rents
The Gross Rent Multiplier assumes 100% occupancy – it does not factor in a vacancy rate or any operating or non-operating expenses like the Cap Rate does.
The average Gross Rent Multiplier in San Diego, California is 8-11, but the more desirable areas such as the beaches or downtown have a higher GRM of 12-20.
Many believe that the lower the GRM, the better the investment. When it comes to the Gross Rent Multiplier, what do you look for?
Louie Goros
Commercial Real Estate Agent
CA BRE #02023076
Valor Real Estate Group
Petco Park
Diamond View Tower
350 10th Ave – 10th Floor
San Diego, CA
Direct: (630) 247-5881
Office: (619) 344-2640
Fax: (619) 872-2400
Email: lgoros@valorre.com
web: www.valorre.com
