Market Value

Market value is the price a property would sell for between a willing buyer and seller, both informed and neither under pressure. Gross rent multiplier divides price by annual rent; for a property you already own, current market value replaces the purchase price in the numerator and gives the multiplier a buyer sees today.

A property bought at $250,000 that now rents for $30,000 and is worth $300,000 has a GRM of 8.3 on cost and 10 on market value. The first describes the deal you got; the second describes the asset now and is what a buyer or lender would compute.

The formula also runs backwards to estimate market value: annual rent times the GRM comparable properties sold at. That is the gross income multiplier form of the income approach. Because it ignores expenses, treat the result as a range and confirm it with a cap rate valuation before relying on it for an offer or a sale.

Further reading: Market Value on Wikipedia.