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A high Gross Rent Multiplier (GRM) implies that a property will take longer to turn a profit. This is because GRM is a measure of the price of a property in relation to its rental income. A high GRM means the cost of the property is high compared to the rental income it can generate. Therefore, it will take more time to recover the investment through rental income, which can affect the profitability of the real estate investment.
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The spreadsheet calculates total expenses and revenues based on the inputs. It shows the Net Operating Income (NOI), the Gross Rent Multiplier (GRM), and the capitalization rate, which is all information that buyers need to make informed comparisons between property values. The GRM is one of the best ways to see a property's value in relation to similar properties in an area. A high GRM implies that a property will take longer to turn a profit. Investors look for a lower GRM because it indicates that there is a shorter time for the investment to earn a profit.
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Need to compare real estate investment opportunities? Use the Residential ProForma spreadsheet to quickly identify if a real estate investment opportu...
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