GRM Glossary

• Capitalization Rate

  NOI divided by price; the net-income counterpart of GRM

• Income Approach

  Valuing property by its income; GRM is its simplest form

• Net Operating Income (NOI)

  Rent after vacancy and expenses; what GRM skips

• Rental Value

  Fair market rent; the rent input to GRM

• Property Investment Calculator

  Tool that computes GRM, cap rate, cash on cash, NPV and IRR

• Real Estate Appraisal

  Professional valuation; GRM is one of its screening tools

• Sales Comparison Approach

  Deriving a market GRM from comparable sales

• Discounted Cash Flow (DCF)

  Full multi-year valuation; GRM is its compressed form

• Real Estate Investing

  Buying property for income and appreciation

• Market Value

  What the property would sell for; the alternative denominator

• Property Tax

  The first expense GRM ignores

• Gross Income

  Income before any deduction; the numerator concept

• Debt Service Coverage Ratio (DSCR)

  NOI over debt service; a GRM blind spot

• Cash on Cash Return

  Cash flow after the mortgage over cash invested; the sibling screen

• Terminal Value (Finance)

  Value at the end of the holding period; ignored by GRM

• Leverage (Finance)

  Borrowed money and its effect on returns; a GRM blind spot

• Buy to Let

  UK rental mortgages, screened on rent-to-price

• Internal Rate of Return (IRR)

  Multi-year return including the sale; what GRM defers to

• Rack-Rent

  Full market rent; passing rent versus potential rent