Home › Forums › Housing › Historic House Price vs. Rent Ratio › This question stems out of
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?
