Owner-Occupancy

A property is owner-occupied when its owner lives there instead of leasing it to tenants. It matters to gross rent multiplier analysis in two ways. Owner-occupied sales are often poor comparables for rentals, and buyers of small multifamily who live in one unit change the rent a GRM counts.

Homes bought to live in are priced on schools, finishes and personal taste, not rent. In neighborhoods where most sales are owner-occupied, GRMs from those sales run high, because buyers are paying for things rent does not capture. Build a market multiplier from sales of properties that were rented, where possible.

An owner living in one side of a duplex collects rent on only the other side. Computing the GRM on full market rent for both units shows what the property is worth as an investment. Computing it on the rent actually collected shows how much of the payment the tenant covers.

Further reading: Owner-Occupancy on Wikipedia.