This question stems out of FSD’s post; I was wondering what the method for calculating a GRM is for a given interest rate.

Using the 5% example of FSD above, I reason a GRM of 240 (which seems high) is justified:

annual rent = 5% of price
–>
12*monthly rent = price * 0.05
–>
12/0.05 = price/monthly rent = 240

Is that how people come up with their “rule of thumb” GRM numbers for screening properties?