What is GRM in Multifamily? | How To with Jake and Gino

Jake & Gino: Real Estate Investing & Multifamily

Jake & Gino

Smartinvesting, Buyingrealestate, Investing, Multifamilyrealestateinvesting, Business, Investingsmart, Apartmentinvesting, Management, Makingmoney, Realestateinvesting, Cashflow, Jakeandgino, Realestateinvestment, Commercialrealestateinvesting, Buyingapartmentbuildings, Entrepreneurship

4.9 • 842 Ratings

🗓️ 6 November 2023

⏱️ 9 minutes

🔗️ Recording | iTunes | RSS

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Summary

Dive into the core of real estate investing with Gino Barbero! In this video, we cover critical metrics like Gross Rent Multiplier (GRM), cap rates, and the 1% rule that every investor needs to understand. Gino shares invaluable insights, from his first deals to current market trends. Learn how to: Apply GRM to assess property value. Use the 1% rule for evaluating rental income. Interpret cap rates to identify market opportunities. Quick Takes: GRM: A quick measure of property value against income. 1% Rule: A benchmark for rental pricing per unit. Cap Rates: The 'holy grail' for understanding market value. Elevate your real estate strategy and create your 'buy right' criteria with our help. For more guidance, apply to join our team at jakeandgino.com/apply. Subscribe for weekly real estate how-to's and check out our podcast for more insights. Thank you for being a part of our community, and see you in the next how-to!

Transcript

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0:00.0	Hello and welcome. My name is Gino Barber. I'm one of the co-founders of Jake and Gino. And in this
0:04.8	how-to video, we're going to be talking about GRM. What is GRM? We're going to be talking a little about
0:11.7	price per unit, the 1% rule. We may throw a little bit of cap rates in there. But to start out with,
0:17.8	GRM stands for gross rent multiplier.
0:23.1	The formula is your properties, purchase price, or the market value, divided by the gross
0:29.4	rental income.
0:31.1	I know when I first started out in investing in real estate, this is a quick way for me to
0:35.4	understand purchase price of a property in relation to how
0:38.7	much income you're getting from that property. Now, when I started out back in 2011 with Jake,
0:46.1	the GRM, the gross rental multiply was really low because property prices were low and the
0:51.8	incomes were, you know, a little bit higher at the point.
0:55.4	Our very first deal, I'll never forget in 2013, the gross rental multiplier was a four.
1:02.6	It means the price was really low and the rents were pretty high at the time.
1:07.2	But that's what happens when you're in a recession.
1:09.6	You're in a buyer's market.
1:11.1	People are, they're afraid. Prices are depressed. And why do you use this metric? That's the most
1:17.2	more important part that I want to talk about in this week's call. When we look at it,
1:23.6	it's one metric that we like to look at. Not the only metric, it's used as a rule of thumb.
1:29.8	And unfortunately, I can't say an eight gross rental multiplier is great because every market
1:36.0	is different. What I would do is I would go into the market that you're in and look at it historically.
1:42.2	And you'll see it was really low back in 2013,
1:45.6	14. As we go into the cycle, it starts getting higher, higher, higher, and then all of a sudden
	...

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