Health & Fitness
Calculating the Value of Your Apartment Building in Westwood
Learning how to calculate the GRM will give you a basic idea on what an apartment building will sell for in a specific area.
As a real estate broker in West Los Angeles, I run into many people who are interested in owning income units. As I mentioned before, ownership of income properties can be a great way of achieving financial freedom. So how do you calculate value of an income property?
The most basic measurement of value is the Gross Rent Multiplier or GRM. The GRM is a ratio of the price of an income property to its annual potential gross income. To calculate the GRM, you only need to know the gross yearly income and the sales price OR list price of a specific property. The easiest way to make sense of it is by performing the math which looks like this:
Let’s assume we have a 4 unit apartment building, a fourplex. The gross rents are...