If you're thinking about buying or selling a multifamily property (or other investment property) in the Harrisonburg area, there's a number worth knowing: 13.2.

That's the average gross rent multiplier -- or GRM -- for most of the multifamily sales in this market over the past twelve months. It's a simple but useful way to think about how investment properties are priced.

What Is a GRM?

The gross rent multiplier is just the sales price divided by the annual rental income. A property bringing in $50,000 a year that sells for $650,000 has a GRM of 13. It tells you roughly what buyers are paying per dollar of income the property generates.

This certainly isn't the only number that matters when evaluating an investment property... but it's a good starting point.

What This Looks Like in Practice

Recent multifamily sales in and around Harrisonburg have ranged from a GRM of 10.5 on the low end to 15.4 on the high end, with most landing somewhere in between. That spread matters -- not every property commands the same multiple, and the reasons why can tell you a lot about what buyers are actually valuing.

What It Means If You're Buying or Selling

If you're a seller, this gives you a reasonable framework for thinking about what your property might be worth -- based on what it actually earns. 

If you're a buyer, it's a useful way to consider whether a list price is appropriate. A property priced at a GRM of 16 or 17 might be priced too high. Another property priced closer to 10 or 11 might be a great opportunity, or there may be a reason it's priced lower.

Either way, knowing the latest GRM data you make better decisions.

I'm happy to walk through the numbers on a specific property you're considering -- or talk through what your rental property might be worth today.

Email me if you'd like a copy of the data behind the 13.2 GRM average above.