Eviction

Eviction is the legal process a landlord uses to remove a tenant, usually for unpaid rent or a lease violation. How long it takes and what it costs varies widely by state and city. A gross rent multiplier assumes rent is collected, and eviction risk is part of what it cannot see.

Where evictions move quickly, a nonpaying tenant costs a few months of rent and legal fees. Where the process is slow, the same tenant can cost far more. Markets with slower processes often trade at lower GRMs for similar rents, because buyers price in the extra collection risk.

A property bought with a tenant already behind on rent has a GRM built on rent that is not arriving. Ask for a rent ledger as well as a rent roll, and base the multiplier on what has actually been paid over the last several months.

Further reading: Eviction on Wikipedia.