GRM’s (Gross Rent Multipliers), are calculated based on actual sales and reported rents of residential rental properties for each area. These can indicate the investment potential of a specific area. Areas with a low GRM likely indicate a short term investment, usually accompanied by higher vacancy rates and maintenance costs. A higher GRM typically indicates an area where an investor expects a longer term investment with lower vacancy rates and maintenance costs.
The annual GRM indicates how many years it would take for the investor to recoup their initial investment in a property, not including taxes, interest, etc, and the monthly GRM indicates how many months.