Posted by James Harris on April 11, 2002 at 09:13:24:
How does one find out what the GRM is in any given area? Please advise.
What do these acronyms mean? - Posted by Bryan (Sacramento)
Posted by Bryan (Sacramento) on April 10, 2002 at 20:34:46:
GRM? SGI? GSI? Help me out here, what do they stand for?
Re: What do these acronyms mean? - Posted by Al fr AZ
Posted by Al fr AZ on April 11, 2002 at 03:28:47:
they are initials not acronyms. acronyms are like nasa, madd, scuba, radar, etc…
Re: What do these acronyms mean? - Posted by Don (Fl)
Posted by Don (Fl) on April 11, 2002 at 01:13:14:
Bryan,
GRM stands for Gross Rent Multiplier. Some investors and appraisers use that as a starting basis for determining the value of an income property. For example, if you have a duplex that rents for $500 each side for a total of $1,000 per month or $12,000 annually and the GRM for that area is 7, theoretically that property is worth $84,000 ($12,000 X 7).
I don’t exactly know what SGI is an acronym for, but looking at the site you included it refers to Projected Annual Income Growth. In other words an SGI of 8.14 means the realtor is projecting an annual income growth of 8.14% per year. GSI seems to be a misprint for SGI.
Here is how I use GRM. I try to buy properties that are rented under market rents for a GRM of 5. I bring the properties up to market rent, and then sell for a GRM of 6 (market in my area). This process usually takes about one year (more or less depending on the amount of units).
For example if a quad had an annual rental income of $24,000 ($500 per unit per month), and I knew other similar apartments in the area are renting for $625 per month, I would try to buy that quad for $120,000 ($24,000 X 5). Then as the leases expired I would raise the rents to $625 per month or $30,000 annually. Using a GRM of 6 (market for my area) that quad is worth $180,000!
Hope this helps.
Don (Fl)