Home › Forums › Housing › North County Price Reductions – 3 › The 8-10 GRM is a general
The 8-10 GRM is a general rule of thumb.
Another rule of thumb is that each year a property will cost about 10% of its purchase price to own and maintain.
For example, a $400K property is going to cost, on avg, $40K per year to own and maintain (mortgage, insurance, taxes, maintenance, etc).
For me to break even on the property I need $40K per year in rents (which equates to a GRM of 10).
I use these guidelines to evaluate potential investment property.
~
My investment experience is limited to San Diego fourplexes.
The first one I purchased in 1998 and paid about 13 GRM. The property and its location justified the higher GRM.
In 1999 I paid 11.5 GRM for a fourplex in Mission Beach and thought I was paying too much.
I purchased four more properties at higher GRMs before coming to my senses.
By 2002 GRMs for multi-units were consistently over 15 and usually 16-20. That’s when I started selling.
