Posted by David Krulac on March 08, 2007 at 06:26:52:
annual rent for example is $12,000 ($1,000 per month) then 7 times rent roll = 7 x $12,000 or $84,000.
another way of saying the same thing is (GRM) Gross Rent Multiplier of 7.
depending where you are looking, area of country, and type of proterty that that you’re looking for that may be difficult to find a 6 or 7.
but besides that GRM is a simplification and does not take into consideration expenses. 2 properties could have the same gross, but very different nets because one building the owner pays more of the expenses such as heat and electricity, and other utilities, taxes, etc.