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What is a Gross Rent Multiplier and how can it help to invest in real estate?

Potential rent multiplier

The specified multiplier estimates the time of withdrawal of the invested amount. This is the purchase price of the property divided by the gross annual rent. The result obtained is the number of years it will take to recover the invested amount with rental income. The lower the result, the more profitable the property can be.

The method is actively used to compare several investment objects, but during the comparison, it should be taken into account that they are in similar markets and have similar operational, technical and other expenses. The method is actively used in real estate valuation.


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