Gross Rent Multiplier

For Video teaching on Market Models go here.

Gross Rent Multiplier (GRM)
GRM is considered an INCOME approach to value for Residential Appraisal, however, it doesn’t consider capitalization of income— instead it uses a multiplier.

PROS: This is a good tool for areas with lots of rentals and lots of investors in the market, where the appraiser can collect good rent data.

A big deviation in value IF the data input is solid, will indicate something is off with the subject property or model.

Helpful Hint: When user inputs rent data in GRM Table, LandMark will capture that data in the Sales File. That allows the user to build a rent model they could then apply.

In LandMark GRM is table driven. The user can build as many rent models as you would like. User may apply GRM in mass.

Model Identification
GRM ID: system generated
GRM Code: user generated
Description: describe GRM Model
Variables: system generated according to the number of independent variables used

Calculations Options
Land Adjustment: In-Model or Use-Subject
Site Improvement: In-Model or Use-Subject
Rent Multiplier: 8.0-8.75 (these may be related to the interest rates, the lower the interest rates the higher the multiplier) Will predict and annual gross rent, then take annual rent times this multiplier to predict value.
Base Value:

Independent Variables
Here we create variables that will predict our rents.
(Example above)
Bedrooms differences adjusted $500
Bathrooms $750
Garage Area 2.75
Quality (see formula below) The higher the quality, the bigger the number.

Effective Age: -50 (negative adjustment for effective age)

To Apply the Rent Model
Residential Appraisal File — Market Model (7th Tab — Edit Mode — CLICK DownArrow — CHOOSE Model — CLICK OK

Gross Rent Muliplier
GRM Model: model used
Multiplier: multiplier used
Market Rent: yearly rent
Contract Rent: monthly contract rent
Rent Source: Contract or Market
Indicated Value: predicted value from GRM Approach
This amount tends to be lower value because its based off of rental property. Its not owner occupied, so it tends to depreciate more quickly than owner occupied properties.